We hope not! But believe it or not someone tried to claim last year for their Shih Tzu guard dog! Of course that is not tax deductible, but if you are self-employed it’s important to ensure you’re aware of the various categories of expenses that you may deduct so you pay the right amount of tax.
Did you know these five common expenses could be claimed as a tax deduction?
Capital allowances
Capital allowances are how you claim relief for capital expenditure on assets that you use in your business, such as: IT equipment, furniture, tools, machinery and motor vehicles. You get to claim capital allowances from the time the assets are first used in your business, even if you already own the assets privately beforehand. The Annual Investment Allowance for capital expenditure is £200,000 meaning that most expenditure up to this amount could receive full tax relief in the first year of business use – the main exception to this is expenditure on cars which has its own separate rules.
Expenses of working from home
If you work from home, you could claim part of the household’s running costs, including utilities, mortgage interest, insurance and council tax. You could claim the actual expenses based on the exact proportion of your business use of the home, or you could claim a flat rate set by HMRC which is linked to the average number of hours you spend working from home each week. It’s worth noting that claiming expenses for working from home could affect the ability to claim Private Residence Relief on your home if you later come to sell it.
Car and motoring expenses
Using your own car for business travel means you could claim part of the running costs as a tax-deductible expense. Again, this will be based on the proportion of the time you spend using the car for business in comparison to any private use. You could either claim for the business proportion of the actual running costs or you could claim a flat rate deduction based on the number of business miles travelled, which you may find simpler. You just need to keep track of the number of business miles travelled. Remember it’s not possible to claim for speeding tickets or parking fines, even if incurred whist travelling for business.
Interest and finance costs
If you pay interest charges on borrowings which are used exclusively for your business you could claim a tax deduction for the interest. This includes things like mortgages, personal loans or bank overdrafts. You could also claim for any incidental costs of arranging the finance, such as loan arrangement fees.
Professional fees and subscriptions
If you are a member of any professional bodies related to your business and you pay subscription fees these will generally be tax deductible. This also applies to any books, magazines or other publications that you subscribe to for the purposes of your business.
And don’t forget….
Although not directly business related there may be other tax relievable items that you could claim: including your pension contributions and any charitable donations made under the Gift Aid scheme. Personal pension contributions and Gift Aid donations will generally receive basic rate tax relief at source however if you are a higher rate taxpayer then you need to include these items on your tax return in order to claim the higher rate relief.
If you would like to find out more, or if you need help in filing your tax return and claiming the relevant expenses, you can contact EY’s Personal Tax Centre at
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