If you are self-employed, you will have to pax taxes depending on the profit your business made over the tax year. One of the benefits of being self-employed is that you can claim expenses that were necessary to run your business, which can help to reduce your tax bill. Any business overheads such as lighting, rent and water bills, or other general maintenance that is essential to run your business can be deducted depending on multiple factors. Let us explain how this works.
Self-employed expenses explained
As someone who is self-employed, you must pay your own tax by completing self-assessment tax returns (paper tax returns deadline is 31 October, and the online tax returns deadline is 31 January the following year). All your income above the personal allowance is taxable, however, it is important to remember that HMRC will not tax you on money that you need to spend to keep your business running. Many costs related to business operations can be deducted from gross income to calculate how much tax you must pay. These are known as tax deductible expenses.
What self-employed expenses can you claim for?
Find out what self-employed expenses you can claim for as someone who runs their own business:
Any expenses that are important to your office functioning properly can be claimed for. These include stationary, printing costs, postage, phone bills, internet bills, or any software use for under two years or that is subscription-based. These are all essential day-to-day elements of operating your business. If your business uses cash-basis accounting, then you will be able to claim expenses for other important office equipment such as computers or printers. You can also claim on software you have used for over two years.
Other important expenses you can claim on involve maintaining the premises your business operates out of. These include rent, costs of using the building such as electricity, gas and water, buildings insurance, or any maintenance and repair costs. This also includes any necessary security costs. It is important to remember that if you own your business premises, you can no longer claim any of these above costs as expenses.
The cost of transport for business purposes can be claimed as part of your expenses, although this excludes travelling to and from your workplace. Costs that will be claimable include train tickets or fuel costs when travelling to meet clients or for important business meetings. If your journey relates to both business and personal reasons, your accountant will be able to advise you on business costs you can claim.
If you have multiple employees, you will be able to claim on salaries and benefits. For example, employee wages or redundancy payments, employer’s National Insurance, insurance, or pension benefits for employees, as well as any training that you pay for. Although, you will not be able to claim on your own salary or benefits, such as National Insurance contributions, life insurance or your own pension costs.
If you are still unsure of which self-employed expenses you can or cannot claim on, or you would prefer to receive support from an expert accountant, contact Omer & Company today. Our comprehensive tax services can help you accurately file your self-assessment tax returns, making sure that you never miss a deadline. If you would like to discuss how we can help you and your business, give us a call today on 020 8850 0700 or email firstname.lastname@example.org so that we can get started.