Being self-employed gives you freedom, but it also comes with managing your own taxes. The good news? Many business expenses can reduce your tax bill. Let’s explore what you can claim in 2025/26 to keep more of your hard-earned money.
Your Tax-Free Personal Allowance
Before diving into specific deductions, remember that everyone in the UK has a tax-free Personal Allowance – the amount you can earn before paying income tax. For the 2025/26 tax year, this stands at £12,570 for most people.
As a self-employed person, you’ll pay tax on profits above this amount, making it crucial to claim all legitimate business expenses.
Office Expenses
Home Office
Working from home? You can claim a portion of your household expenses. Two options are available:
Simplified method: Claim a flat rate without receipts:
- £11 per month if you work 25-50 hours monthly from home
- £22 per month for 51-100 hours
- £33 per month for 101+ hours
Actual costs method: Calculate the exact business percentage of your bills. For example, if you use one room out of five exclusively for business 40% of the time, you could claim 8% (1/5 × 40%) of your:
- Mortgage interest or rent
- Council tax
- Utilities (gas, electricity, water)
- Home insurance
- Broadband
- Repairs and maintenance
Travel Expenses
Vehicle Costs
You can claim business travel costs in one of two ways:
Simplified mileage allowance:
- 45p per mile for the first 10,000 business miles
- 25p per mile thereafter
- 24p per mile for motorcycles
- 4p per mile for bicycles
Actual costs method: Calculate the business percentage of all your vehicle expenses:
- Fuel
- Insurance
- Road tax
- MOT and repairs
- Breakdown cover
- Parking fees (for business trips)
Remember, regular commuting to a fixed place of work isn’t claimable, but travel to temporary workplaces, client meetings, or business errands is.
Public Transport and Accommodation
When taking business trips, you can claim:
- Train, bus, taxi and air fares
- Hotel accommodation
- Meals on overnight business trips
Equipment and Tools
Tech Equipment
Computers, printers, smartphones and software used primarily for business are tax-deductible. For items with mixed personal/business use, claim only the business percentage.
Under the Annual Investment Allowance (AIA), you can claim full tax relief on most equipment purchases up to £1 million in the 2025/26 tax year.
Tools and Machinery
Specialist equipment needed for your trade – whether you’re a plumber, carpenter, photographer or musician – is fully deductible.
Professional Services
Accountancy Fees
Fees paid to your accountant for business services (preparing accounts, tax returns, business advice) are tax-deductible.
Legal and Professional Fees
Other professional services related to your business are generally claimable:
- Legal fees for business contracts
- Professional subscriptions relevant to your work
- Trade association memberships
Insurance
Business insurance premiums are fully deductible, including:
- Professional indemnity insurance
- Public liability insurance
- Contents insurance for business equipment
- Income protection insurance (specifically for self-employed income)
Marketing and Business Development
Advertising and Promotion
All legitimate marketing expenses can be claimed:
- Website design and hosting
- Business cards and printed materials
- Online advertising costs
- Exhibition or trade show fees
- Client entertainment (though subject to restrictions)
Training and Development
Courses that update existing skills related to your current business are tax-deductible. However, training for new skills to start a different business typically isn’t.
Stock and Materials
If you sell products, you can claim:
- Cost of goods purchased for resale
- Raw materials used in manufacturing
- Packaging materials
- Delivery costs
Staff Costs
If you employ others, you can claim:
- Employee salaries and wages
- Employer’s National Insurance contributions
- Staff pension contributions
- Staff training costs
- Staff welfare costs
Financial Costs
Bank Charges
Fees for a business bank account are deductible. If you use a personal account for business, you can claim a reasonable proportion of charges.
Interest and Finance Costs
Interest on business loans and credit cards is deductible when the borrowing is for business purposes.
Common Mistakes to Avoid
- Claiming personal expenses: HMRC scrutinises mixed-use items, so keep good records showing business use.
- Missing legitimate deductions: Many self-employed people forget home office, mileage and small purchases throughout the year.
- Poor record-keeping: Keep receipts and invoices for everything. Digital record-keeping apps can make this easier.
- Claiming capital items incorrectly: Large equipment purchases may need to be claimed as capital allowances rather than expenses.
Keeping Good Records
Whatever you claim, you need evidence. Keep records of:
- All income received
- Business expenses with receipts
- Vehicle mileage logs
- Time spent working at home
HMRC can investigate your tax affairs going back up to 6 years, or 20 years if they suspect deliberate errors.
Need Help?
Tax rules change regularly, and this guide offers general information but isn’t personalised advice. For guidance specific to your situation, consult a qualified accountant.
At Penny Ledger, we specialise in helping self-employed people maximise legitimate tax deductions while staying compliant with HMRC requirements. Want to discuss your specific circumstances? Get in touch today.
