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What expenses can I claim?

When you're filing a self assessment tax return, you can claim for certain expenses to help bring down your tax bill.

In general, when the taxman talks about "allowable expenses", he means things that were necessary to keep your business running. Not every cost counts as an "expense", though, and not every expense is allowable.

The rules trip a lot of people up, leaving them stuck with a ramped-up tax bill or in hot water with HMRC. RIFT's tax return service is all about keeping the taxman in his place and off your back. If you feel him breathing down your neck around tax return time, here's a rundown of some often-forgotten expenses.

Tax Returns ExpensesWhat can I claim for?

PHONE AND INTERNET CHARGES: Even if you work from home, you could still claim some broadband and phone bills against your taxable profits. It can be tricky to work out how much of your costs you can claim for, though. A lot depends on the kind of business you're running and what other use your phone and internet service get. It's definitely worth looking into, but some professional advice will help you to get the balance right.
CAR USE: Unless you have a vehicle you only use for work, it's not always easy to know what to claim as expenses. There are two main ways of working it out, and depending on which you use, you'll need to keep track of either business mileage or all your vehicle expenses.
FOOD AND ACCOMMODATION: If you travel a lot for work and stay away overnight, the chances are you've got some expenses claims. Again, you've got to be careful over what counts and what doesn't - especially if you're splitting bills with someone. The taxman knows you'd be eating anyway, so you won't necessarily agree on what a fair expenses claim looks like.
COMPUTERS AND SOFTWARE: Here's where things get interesting. The expenses we've talked about so far have mostly been one-off costs for things that get used up quickly. We've talked about fuel, food, phone bills and so on. If you're buying something like a new PC, which you might use for years, things change. Instead of a one-off expense, a computer or piece of software might count as a "capital asset". That's a whole different thing, and has its own section of the self assessment form. Generally, if you're not sure if you've just paid an expense or bought an asset, get good advice before filing your return. See our note below about the "cash basis" of accounting, though.
DONATIONS TO CHARITIES: If your business donates to charities, HMRC gives you a pat on the head in the form of tax relief. That's probably not the main or best reason to give money to worthy causes, of course. It's nice to know the taxman's heart's in the right place, though.

Self Employed ExpensesI'm self-employed, can I claim meal expenses?

If you're self-employed, freelance or contracting, or working CIS in construction, this will be handled under your expenses in your self-assessment tax return in the normal way.

The same principles apply though, you will need to be able to provide evidence of what you've spent in order to claim them as costs. Keep your meal receipts in the same way as you keep all your other records needed for your tax return.

Allowable ExpensesHow are allowable expenses worked out?

When you spend money strictly in order to do your job, you can claim some tax back from HMRC. When we work out your refund, we include all the essential travel and other costs you've paid out in our calculations. Remember, the refund amount we calculate depends on the information you give us. Make sure those details are full, accurate and up-to-date. HMRC can get additional information from employers at any time, of course, which could affect your final tax rebate amount.

Tax Returns ExpensesA quick note about accounting methods

When it comes to filling in a tax return, there are actually a few ways to work out your income and expenses:

TRADITIONAL ACCOUNTING

This method uses the scary-sounding "accrual basis" of accounting. Basically, you count your money coming in from the time you've earned it, not when it eventually arrives. However, if you buy something to sell later, its cost doesn't become an expense until you actually sell it.

CASH BASIS ACCOUNTING

For smaller businesses, the cash basis can be simpler and less weird. You count your income when it arrives, and your expenses when they go out. You don't usually have to stress much over capital expenditure. You just record what you've spent and don't worry about the difference between costs and expenses.

SIMPLIFIED EXPENSES

If you're self-employed and want a really easy life, you can forget about keeping exhaustive records and choose simplified expenses. Basically, HMRC has worked out what they think typical small businesses spend to keep running. Instead of working out your total business costs, you can just use their numbers instead. You probably won't get all the tax relief you should if you rely entirely on their simplified figures. You might have an easier life when it's time to file your return, though.

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Tax Returns ExpensesAbout RIFT

RIFT Refunds has been keeping the taxman honest since 1999, and we're the best in the business. Our self assessment tax return service is designed to take the heat off when it comes to filing your return. Give us a call or email to see how we can help keep you in HMRC's good books. We'll even help put more of your cash back in your pocket while we do it.

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Wondering if you can claim a tax refund or need to submit a tax return? Use our online tools to find out if you're owed money by HMRC.

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What expenses can I claim?​