travel expenses hmrc self employed

Tax-Deductible Business Travel Costs for the Self-Employed

Are you self-employed and frequently travel for business purposes? If so, you'll be pleased to know that many of your travel expenses can be deducted from your taxable income, thanks to HMRC's allowances for legitimate business travel costs.

This blog post will provide an in-depth overview of what qualifies as tax-deductible when you're travelling for work as a self-employed individual in the UK.

What Qualifies as a Business Trip?

Before we dive into the specific deductible costs, it's important to understand what HMRC defines as a "business trip" in the context of self-employment . In general, any travel you undertake wholly and exclusively for the purposes of your trade, profession, or vocation can be considered a business trip.

This could include trips to meet with clients or customers, attend conferences or trade shows relevant to your industry, conduct research, purchase supplies or equipment, or any other activity directly related to the operation of your business.

However, it's crucial to note that regular commutes between your home and a permanent workplace do not qualify as business travel for tax purposes. The key distinction is that business trips involve temporary travel away from your normal place of work.

Deductible Travel Costs

Now that we've established what constitutes a business trip, let's explore the specific costs that can be deducted from your taxable income:

Transportation Expenses

This includes the costs of flights, train tickets, bus fares, taxis, fuel for your vehicle, parking fees, and any other expenses incurred while getting to and from your business travel destination. If you use your personal vehicle for business travel , you can deduct a mileage allowance based on HMRC's approved rates.

Accommodation Costs

If your business trip requires an overnight stay, you can deduct the costs of hotels, bed and breakfasts, or other accommodation expenses. It's important to keep receipts for these expenses and to ensure that the accommodation costs are reasonable and not excessive.

Meal Expenses

When travelling for business, you can deduct the costs of your meals and non-alcoholic beverages. However, HMRC has specific rules regarding the deductibility of meal expenses.

For example, if you're travelling for a single day and your business trip does not require an overnight stay, you cannot deduct the cost of your meals. Additionally, if you're traveling with a spouse or other family members, you can only deduct the portion of the meal expenses that relate to your own meals.

Business Costs

Any expenses directly related to the business purpose of your trip can be deducted. This could include the costs of attending conferences or trade shows, purchasing supplies or equipment, hiring temporary staff or contractors to assist with your business during your absence, or any other legitimate business expenses incurred while travelling.

Recordkeeping and Documentation

To claim these tax deductions, it's crucial to maintain accurate and detailed records of your business travel expenses. This includes keeping receipts, invoices, and other documentation that clearly show the purpose, date, and amount of each expense.

HMRC requires self-employed individuals to maintain records for at least five years after the relevant tax year, so it's essential to have a robust recordkeeping system in place.

Proportional Deductions

In some cases, your business travel expenses may be partially personal and partially business-related. For example, if you extend a business trip for leisure purposes or bring along a spouse or family members, only the portion of expenses directly related to the business purpose of the trip can be deducted.

It's important to carefully allocate and separate the personal and business components of your expenses in these situations. HMRC may scrutinize disproportionate deductions or expenses that seem excessive or unreasonable.

Simplified Expenses

For certain types of expenses, HMRC offers the option of using simplified expenses instead of deducting actual costs. This can be particularly useful for self-employed individuals who want to streamline their recordkeeping and tax reporting.

For example, instead of deducting your actual vehicle expenses, you can use HMRC's approved mileage rates, which allow you to claim a fixed amount per business mile travelled. This can be a convenient alternative to tracking and deducting individual expenses like fuel, maintenance, and insurance.

Seek Professional Advice

While this blog post provides a general overview of tax-deductible business travel costs for the self-employed, it's always advisable to seek professional advice from a qualified accountant or tax advisor.

They can provide tailored guidance based on your specific circumstances and ensure that you're fully compliant with HMRC's regulations.

Furthermore, tax laws and regulations can change from time to time, so it's essential to stay up-to-date with the latest developments and requirements.

As a self-employed individual in the UK, it's essential to understand and take advantage of the tax deductions available for legitimate business travel expenses. By carefully tracking and deducting these costs, you can minimize your taxable income and keep more of your hard-earned money in your pocket.

Remember, HMRC has strict rules and requirements for claiming these deductions, so it's crucial to maintain accurate records and seek professional advice when necessary. With the right approach, you can ensure that your business travel expenses are properly accounted for and that you're fully compliant with the tax regulations.

If you're a self-employed business owner in the UK and need guidance on tax-deductible business travel costs or any other aspect of your finances, book a free discovery call today with our team of experienced accountants and tax advisors. We'll be happy to assist you in maximizing your deductions and ensuring that you're fully compliant with HMRC's regulations.

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Claiming travel and accommodation expenses

Are you self-employed and have to regularly travel for your business? And does this travelling ever involve an overnight stay away from your home?

If the answer is yes, then there's good news - you may be able to claim some of these costs back. Here's a few tips for working out which travel and accommodation costs you can include in your business’s accounts.

1. Reason for the journey

Before you can claim for travel or accommodation, you need to consider why you made the journey in the first place. Was it just for business, such as to visit a client or to pick up your new business cards?

And if it was for business, was it a one-off journey, or one that you undertake more frequently? In the past, HMRC has vetoed tax relief on journeys from home to a place of work because it was attended “regularly and predictably” by a sole trader.

Alternatively, was there a private element to your travel? For example, did you stop on your way home from a client meeting to do your weekly shop or another non-work-related chore?

Before you can work out if you can claim for your travel, you need to establish what the primary purpose of the journey was. If it was mixed (i.e. for both business and private), then you need to look at whether you can split the business element from the private part of the journey.

Let's look at some examples.

Business journey: incidental private use

If your journey was primarily for business, and any private use of the journey was incidental, you can put the full cost of this travel into your business accounts.

Simon is a web designer. He travels by train from his home in Birmingham to visit a client in Brighton. While he is there, he has a walk by the sea.

The purpose of Simon's journey to Brighton was for business. The private element, his walk by the sea, was purely incidental. Simon therefore claims the full cost of his train ticket in his accounts.

Mixed journey: different uses separable

If your journey included both business and private elements, but you can split out the private element, then you would include only the business cost in your accounts.

Jessica is a business consultant. She lives in Glasgow but has several clients who are based in Manchester. She travels to Manchester and stays there for two nights in order to attend meetings with her clients. She then decides to extend her stay to three nights so that she can attend a Premier League football match. Doing this costs her one night's extra hotel bill and £50 in fees to change her train ticket.

The purpose of Jessica's journey was to visit clients. She can claim the full cost of her train ticket but she cannot claim the £50 in fees to change the ticket, because she only had to do that in order to see the football match, which is not a business expense .

She can also only claim two nights' worth of hotel accommodation, not three, because the third night' stay was for a personal purpose.

Mixed journey: no separation possible

If your journey is for mixed purposes, and you can't split out the business and personal elements, then you can't claim any of the cost of that journey.

Tom runs a microbrewery. He travels to his local town to bank his business takings and to do the weekly supermarket shop for his family. Because that journey was for mixed purposes, and because he can’t split the cost into business and private, Tom must not include any costs for this journey in his business's accounts.

2. Use of your own car

When you're self-employed you will often travel in your own car on business.

The simpler way to do this is to include your business mileage in your accounts, at HMRC's approved rates . If you've already been doing this for some years, you must continue to use this method until you change your car.

Otherwise you'll need to work out your car running costs and claim a percentage of them in your accounts, based on how much you used your car for business and how much was private. This means you have to track the mileage you travelled for all your journeys, so that you can work out the business use percentage of your car.

This second method will take longer but may save you tax if you have a car that’s comparatively expensive to run.

3. Method of transport

HMRC don’t require you to use the cheapest available method of transport - or even to claim only the amount that the cheapest method would have cost you. You can claim the full amount you spent on the journey.

Let's take an example.

Elizabeth is a self-employed PR consultant working in London. She travels to Edinburgh to visit a client.

To make this journey by overnight coach would cost her £35, to go by train would be £90 standard class or £160 first class, and to fly would cost her £80.

Elizabeth decides to save time and fly.

She can claim the full £80. She's not restricted to claiming only £35 because there would have been a cheaper way she could have reached Edinburgh.

The main issue with travel and accommodation is to make sure you're certain that the only costs you're including in your accounts are for business travel. And remember - if you are in any doubt about what you can and can't claim, you should seek professional advice from an accountant who will be able to advise you.

More expenses tips:

• How to manage your expenses day-to-day
• Working from home expenses
• Entertaining expenses
• Clothing expenses
• Scanned receipts and HMRC

Disclaimer: The content included in this guide is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this guide. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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Claiming Travel and Accommodation Expenses: A Comprehensive Guide for the Self-Employed

The Specifics of Using Your Personal Car for Business

When you’re self-employed, it’s common to use your personal car for business travel. There are two primary ways to account for this:

• The simpler method involves including your business mileage in your accounts at HMRC’s approved rates. If you’ve been using this method for several years, you must continue to do so until you change your car.
• The alternative requires you to calculate your car running costs and claim a certain percentage of them in your accounts. This percentage should be based on how much you used your car for business compared to private use. Consequently, this method requires you to track the mileage of all your journeys to correctly calculate the business use percentage.

While the second method may be more time-consuming, it could result in tax savings, especially if you have a car that’s comparatively expensive to run.

Choosing Your Mode of Transport: What Costs Can You Claim?

When it comes to claiming travel expenses, HMRC does not require you to use the cheapest available method of transport, nor to claim only the amount that the cheapest method would have cost you. You can claim the full amount you spent on the journey.

For example, consider Elizabeth, a self-employed PR consultant working in London who travels to Edinburgh to visit a client. Several travel options are available to her: an overnight coach that costs her £35, a standard class train ticket for £90, a first class train ticket for £160, or a flight for £80. Even though the coach is the cheapest option, Elizabeth decides to fly to save time. She can claim the full £80 as it was the cost she incurred for a business journey, not restricted to only £35 just because there was a cheaper option available.

The primary issue with travel and accommodation expenses is ensuring that the only costs included in your accounts are those incurred for business travel.

The Importance of Professional Advice: When to Turn to an Accountant

Claiming for travel and accommodation expenses can be a complex process, particularly when there are mixed-purpose journeys involved. While this guide offers a comprehensive overview, it’s always advisable to seek professional advice when in doubt. An accountant can provide valuable guidance, ensure you’re compliant with HMRC rules and help you maximise your claimable expenses.

Conclusion: Streamlining Your Expense Claims

Understanding the intricacies of claiming travel and accommodation expenses is key to accurate accounting and maximising your business deductions. From determining the purpose of your journey to utilising your personal car for business, each aspect demands careful consideration. While it’s important to claim all eligible expenses, ensuring that these are strictly for business travel is vital to compliance with HMRC rules such as keeping accurate records . Whenever faced with doubt, remember, turning to an accountant for professional advice is always a prudent choice. Thus, with the right tools and guidance, you can streamline your expense claims and focus on driving your business forward.

Need Some Help?

At devonshire green, we’re committed to helping self-employed business owners ensure they are as tax efficient as possible, whilst remaining compliant. call us today to find out how we can help you., recent posts.

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Foreign business travel: expenses and allowances explained.

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We’re living in a global economy, and if you want to grow your business fast, foreign clients can be a great source of income, as well as a great excuse to see the world. With the increase in people becoming self-employed and online work becoming the norm, there’s never been greater potential to source work from overseas .

Sometimes a big business deal needs a personal touch, and that usually means hopping on a plane to shake some hands in foreign lands. Most business owners will have their domestic business travel sussed – save your taxi receipts, claim your business miles etc. – but international business travel has a few quirks you need to know about.

The same rules apply

HMRC’s house rules for claiming business expenses – that they must be “wholly and exclusively” for business purposes – apply wherever you are in the world.

The requirement to keep proof of purchase is also a worldwide one, so be sure to look up “Can I have a receipt, please?” in your phrase book before hopping in that taxi in Shanghai.

Foreign travel will provide a great opportunity to let your hair down and enjoy a few sangrias by the pool – but the taxman never takes holidays, and if anything, HMRC’s eligibility requirements for allowable expenses abroad are even more strict than at home.

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Don’t mix business with leisure

HMRC’s concept of “duality” means any whiff of personal benefit will render foreign travel inadmissible as a business expense.

Want to delay your flight home by a few days so you can take in the historic gothic architecture of Bremen after the 7th International Offshore Wind Power Substations Conference ? Nein! (No) that would mean you can’t claim it back.

Want to bring your spouse along to Stockholm so they can enjoy the hotel gym while you go to Wikimania ? No longer an allowable expense, kompis (for the non-Swedish speaker that means buddy in Swedish!).

It’s not impossible to enjoy a bit of leisure time when travelling overseas for business, but HMRC’s rules are strict and there has to be a clear divider when you close your laptop and open up your Lonely Planet.

Our hapless turbine engineer travelling to Bremen could book outward and return tickets separately, and the conference accommodation and the leisure days as two distinct bookings. They’d then claim for the outward flight and the conference accommodation, and pay for the rest out of their own pocket. Sehr einfach (very easy)!

The enthusiastic Wikipedian travelling to Sweden? Book the spouse’s travel separately, put them up in a different hotel and they’re bra (good!).

A tremendous hassle, but those are HMRC’s rules. Generally speaking, if an invoice , bill or receipt has spending for personal benefit on it, you can’t claim it back.

Spending money

Once you’ve actually arrived at your destination, HMRC’s rules on what you can claim are a little more straightforward.

You can treat foreign expenses exactly as you’d treat domestic spending – just keep the receipt and claim the whole amount back.

If you lose your receipts or want to keep things simple, the taxman has a handy (if huge) list of subsistence rates for every country on Earth , including major cities. It’s important to note these rates aren’t allowances – you can only claim the amounts prescribed by HMRC if you actually incur expenses up to that amount.

If you travel regularly, you’re probably used to juggling exchange rates, and they can make claiming expenses tricky. A €30 taxi ride could cost £20 when you take it, £21 when it comes out of your bank account, and £22 when you come to claim the expense in your accounting software. If in doubt, always use the amount that left your bank account – it’ll make your bookkeeping that much simpler.

It’s almost impossible to go on holiday and not return with a bag full of tourist tat. If you plan to purchase something a little more substantial than a fridge magnet, you can take advantage of lower prices abroad to purchase assets for your business – as long as you pay the correct taxes.

Many countries will allow foreign visitors to reclaim sales tax, either when they leave the country or when they buy (many large malls will have tax reclaim counters). If you purchase a business asset – for example a camera, laptop or some other sizeable piece of equipment – you can reclaim the sales tax. You’ll need to declare the asset when you return to the UK and pay any applicable VAT , but if you’re Standard VAT registered you can reclaim that on your next return.

You’ll save your business a tidy sum, and your new purchase will probably prove much more useful than a bottle of Absolut Vodka and a Dala horse .

If you’re looking for more information on what expenses you can claim then our articles “What expenses can I claim as a limited company?” or “What expenses can I claim as a sole trader?” should be just what you need. Alternatively, for freelancers who prefer their home comforts, we've got a guide on working from home tax relief too.

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Self Employed Travel Expenses – Eligibility

Confusion Reigns

Claiming travel expenses – whether public transport or using your own car (mileage or apportioned costs) – can be confusing.

This helpsheet applies to Sole Traders and Partners.  The guidelines for Company Directors are different.

HMRC changed the rules around claiming Travel and Subsistence from 2013, and we find there is still confusion around the new rules.

If someone has an entirely peripatetic working life and their business is run from home, then there are no restrictions on deducting business journeys and related costs against tax – these costs could be:

• Motoring – on actual costs or mileage
• Public transport
• Accommodation for overnight stays
• Subsistence / meals

By contrast if a Self Employed person has one or more regular places of work other than home then HMRC deem this to be a permanent workplace, and thus the journey is commuting and not eligible for deduction – as home to work travel is never deductible (this broadly puts a Self Employed person in the same position as somebody who is Employed)

Samadian Case

Prior to 2013 the issue didn’t come up very often, only in egregious cases. Then in 2013 HMRC unexpectedly took the Samadian case to tribunal and won. This threw the issue of travel for the Self Employed up in the air, changing the existing status quo. Many people regard it as a bad ruling, but for now at least, its law. Briefly the case was as follows:

• The Samadian case concerned a doctor travelling from an office at home to private hospitals; the private hospitals were considered “places of work”
• It was also ruled he had a “place of work” at his home
• It was held that the travel from home to the private hospitals had duality of purpose – that is to say it was home to work travel as well as business travel – and thus was disallowed as an expense for tax deduction.
• Travel to private hospitals was distinguished from travel to see patients at their own homes which was allowed
• “Travel expenses for journeys between home (even where the home is used as place of business) and places of business are treated as non deductible” (quote from tribunal)
• The Tribunal relied on the principle in Mallalieu v Drummond – this is a case ostensibly about clothing, but also more generally expenses with duality of purpose – those expenses not “wholly and exclusively” for business, and hence disallowed

The tribunal did re-affirm that expenses are allowable for itinerant working. They also said “The ‘wholly and exclusively’ test is to be applied pragmatically and with regard to practical reality”.

Tax Tribunal Decision – Samadian v HMRC – reported decision Not more travel mix-ups? – this is a useful succinct summary of the case, its progress, and the issues brought up

The law as it stands then, with Samadain being the latest precedent, requires a pragmatic view:

• Is there a regular place of work with a regular and predictable pattern of attendance?
• Does the work you carry out at one particular place make it a “place of work”

Broadly the more time you spend at a place, and the less different places you work from, then the more likely that expenses are not deductible.

Pragmatic Approach

This does create practical issues as most people’s circumstances will be a blend of the extremes above – some regularity, but also an itinerant aspect.

Anyway, your judgement here will determine expenses you can claim.

Generally, our advice would be:

• Travelling to locations where you are employed under PAYE cannot be expensed.
• Travelling to business premises where you carry out a substantive part of your Self Employed activities cannot be expensed, eg if you own a shop, travelling to the shop.
• Travelling between business premises can be expensed, eg if you own a number of shops, travelling between them.
• If your work is mobile, eg a gardener working for a number of clients over the course of each week, then these journeys can be expensed.
• Miscellaneous trips, eg to the bank, or a supplier, wholesaler, can be expensed.

Remember these rules apply to all travel costs – Public Transport, Own Car, Shared Cars, Accommodation, Subsistence and Meals

Although its not been tested in the tribunals, our view would be that if you need to use a car of van to travel to workplaces as you need to transport more equipment than you can move by hand, then this ought to take you outside of these rules, as clearly the journey then has a purpose of moving equipment from location to location.

See also our separate Guide to Car Costs Guide to Car Costs

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Self employed expenses – which allowable expenses can you claim.

A self-employed person in the UK will pay tax based on the profit they made in the preceding tax year. However, self-employed people can claim tax relief on certain business expenses. For this reason, it’s essential to understand which expenses are allowable business expenses for self-employed individuals.

Key Takeaways

• Self-employed people may claim tax relief on some business costs.
• These claimable expenses must be directly related to running your business.
• You’ll need to retain records of your expenses for at least 5 years.
• Self-employed home office expenses also qualify for tax credit.

Table of Contents

What are Allowable Expenses for the Self-Employed?

How do i claim self-employed expenses.

• Self-Employed Allowable Expenses List in the UK
• Self-Employed Allowable Expenses Table

What Expenses Can I Claim When Working From Home?

How can i track my allowable expenses, freshbooks makes tax preparation simple.

• Frequently Asked Questions

In the UK, self-employed allowable expenses are tax-deductible business expenses you can claim. These expenses represent the money spent on items or services used solely for the business. This ensures that self-employed individuals are only taxed on their actual profit. 

Therefore, every allowable expense must specifically be a needed business expense and not a personal purchase.

To claim self-employed business expenses, simply add your allowable expenses to your self-assessment tax return form. List each expense and its associated cost in the designated areas on your form. To see your taxable profits, simply subtract your total allowable expenses from your total business income before tax. 

Alternatively, you can claim a flat £1,000 as a trading allowance. This flat allowance is not taxed— you won’t need to file it on your tax return. However, if you take this route, you won’t be eligible to claim any other business expenses.

13 Self Employed Allowable Expenses List in the UK 

While the HMRC offers tax relief by letting sole traders claim business expenses, not all expenses are allowable. The following self-employed allowable expenses list showcases many of the expenses you can claim.

1. Office Supplies 

The cost of any simple office supplies such as paper, pens, and envelopes qualify as an allowable business expense. With the increasing digitisation of the workplace, software tools for business use also qualify as “office supplies.” However, this only applies to software tools used for less than 2 years (subscription or non-subscription).

2. Business Equipment 

You can claim money on any office equipment, such as computers, laptops, and mobile devices, as long as they have been used within the past 2 years. You cannot claim business expenses on small equipment purchase costs. You can also only claim equipment if you use cash-based accounting. If you use traditional accounting, you’ll need to claim capital allowances instead.

3. Business Premises 

You can claim allowable expenses on your office rent and utility bills. However, you cannot claim the initial cost of the building or renovations. The initial cost and any needed renovations may qualify as a capital allowance instead. 

4. Transport 

Travel and accommodation expenses can be claimed as long as the trip was for business purposes. You may claim expenses on meals during overnight business trips but only for breakfast and evening and only within a reasonable amount. You cannot claim expenses on your daily commute from home to your workplace.

5. Professional & Financial Services 

Professional fees for accountants, financial advisers, legal councils, surveyors, and bank charges can be claimed as self-employed expenses. This is only if said professional services are entirely for business purposes. Professional indemnity insurance also qualifies.

6. Stock & Materials 

Any raw materials or items purchased for resale are allowable expenses for self-employed individuals. This includes pre-built resale items and the raw materials required to build new items to sell. Costs directly associated with purchasing resale goods, such as shipping costs, are also eligible. 

7. Marketing & Advertising 

Some marketing fees are allowable for self-employed expenses. You can claim the costs of running your website, advertising in newspapers or directories, free samples, sending post advertisements, and subscribing to professional publications. You cannot claim business expenses on running events, entertaining clients, or payments to political parties. 

8. Clothing 

You can claim work-related clothing such as uniforms, protective gear, or costumes as an entertainer. You cannot claim everyday clothing regardless of whether or not you wear it to work. For instance, you cannot claim the purchase of formal wear for a business meeting, but you can claim the purchase of black trousers as part of a work uniform.

9. Car & Vehicle Costs 

You can claim various motor expenses if you need your car for business trips. This includes vehicle insurance, fuel, parking fees, repairs, or hire charges. Bear in mind that these costs must be associated with an irregular business trip, not your daily commute. If you use public transit, bus, and train fares also qualify under these same guidelines. You also cannot claim any fines if incurred even on a business trip.

10. Pension Contributions 

Pension contributions for yourself are not technically business costs. Therefore, you wouldn’t claim expenses on it like other costs. Instead, you simply don’t have to pay tax on these contributions. However, you can claim pension contributions for employees as a business expense.

11. Staff & Employee Costs 

Employee and staff salaries qualify as self-employed deductible expenses. Agency fees, benefits, bonuses, subcontractors, and employee National Insurance contributions are all expenses you can claim. However, you cannot claim your own salary, insurance, or income tax.

12. Training

You may claim tax relief on any training courses related to your business for yourself or your employees. Although, these courses must be related to your current business model. You cannot claim tax relief on courses to help you start a new business or expand into new areas.

13. Charitable Donations

In most cases, charitable donations don’t qualify as a deductible business expense. However, there are exceptions to this with sole trader business expenses. If you donate via your bank account, you will not get any tax relief. However, if you donate via Gift Aid, you will receive 25p tax relief for every £1 you donate.

Whether to claim expenses or any other reason, FreshBooks takes the pain out of your tax preparation process. Watch the video to see how!

Self Employed Allowable Expenses Table

Please consult the following table for a quick overview of the allowable sole trader expenses list. You may use this as an easy-to-access reference to double-check if a particular expense is eligible. 

If you work from home, you may claim some of your utility bills and mortgage interest. The amount you can claim is based on the floor space and number of rooms you use for business. Here are some formulas to help you figure that out.

Calculate the percentage of the total surface area that your work room occupies:

• Surface area percentage = total surface area of your home/surface area of the room

Calculate the amount that can be claimed:

• Percentage you can claim = surface area percentage x bill amount

Calculate the amount of tax relief you may receive:

• Tax relief = percentage you can claim x days worked from home/total workdays

There’s a good chance that you will have several allowable expenses. All of these expenses must be deducted to determine your taxable profit. To do this, you must create an organised system for all your receipts, credit card statements, or other relevant documentation.

This could be made much simpler with the FreshBooks expense tracking feature. Simply connect your bank account or credit card to FreshBooks, and the software will automatically update your records to include your most recent spending. This will save you hours on manual expense tracking.

Claiming expenses when you pay income tax can offer near-immediate tax relief. As a sole trader, this is crucial as you are the owner and primary employee of your business. Any tax-deductible on any business costs are surely to your benefit.

Keep this process simple with FreshBooks. Our accounting software makes it easy for you to maintain and retain accurate expense records. Try FreshBooks free to see how you like it and experience the difference it can make.

FAQs about Self Employed Expenses

As a self-employed business, you can claim tax relief on a lot of your assets. Still, you need to file your claims properly to reap the benefits. Here are some FAQs on this process to lend you a hand.

How do you prove self-employed expenses? 

You can prove your self-employed expenses by maintaining accurate records of every business cost. Such records may include receipts, credit card statements, or correspondence. FreshBooks accounting software makes it easier for you to keep all these records organised in one central location. 

Do I need fuel receipts to claim mileage? 

You will need to keep your receipts to claim mileage on your personal vehicle if you drive it for business reasons. Remember, you can only claim business-related trips using your personal vehicle for this purpose. You will also need to retain records of the dates of your trips and your start/end addresses, including postal codes. 

How much can I claim without receipts? 

Claiming expenses always requires receipts unless you opt for a simplified expenses system. The amount will vary by system. Examples include the trading allowance and simplified expenses for working at home, company vehicles, or living on your business premises. You can calculate simplified expenses using FreshBooks just as easily.

How long do self-employed workers need to keep receipts? 

Whether or not they are deductible expenses, for self-employed workers, business records must be retained for at least 5 years. This refers to 5 years after January 31 of the relevant tax year. For instance, records relevant to 2024 must be retained at least until January 31, 2029.

Will HMRC ask for proof of expenses?

The HMRC doesn’t routinely ask every self-employed individual to show evidence of their expenses. However, they have the authority to investigate your tax return. If the HMRC asks for proof of expenses, you must provide relevant documentation supporting your claims. You can use FreshBooks to maintain documentation to use in this situation.

More Useful Resources

• Sole Trader Tax Guide
• Allowable Expenses & Disallowable Expenses
• Working from Home Tax Relief
• Marriage Allowance
• Tax On Rental Income

Levon Kokhlikyan, ACCA

About the author

Levon Kokhlikyan is a Finance Manager and accountant with 18 years of experience in managerial accounting and consolidations. He has a proven track record of success in cost accounting, analyzing financial data, and implementing effective processes. He holds an ACCA accreditation and a bachelor’s degree in social science from Yerevan State University.

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Track mileage automatically

Hmrc travel expenses guidelines, in this article, what qualifies as a travel expense, are reimbursements for travel expenses tax-free, what are per diem rates, travel expenses for employees, travel expenses for the self-employed, travel expenses for employers.

If you are a UK resident who travels for work, your business-travel expenses likely qualify for either reimbursement or tax relief.

HMRC travel expenses guidelines are a somewhat complicated matter, but in this article, we will give you an overview of the things you need to know when you want to claim back money spent on travel that is necessary for work.

The first thing to understand is that not all travel expenses are eligible for tax relief . Notably, HMRC only allows full tax relief on travel expenses that are "wholly and exclusively" for business purposes.

This means that if you mix business and personal travel, you will need to apportion the costs to determine which parts of your trip are eligible for tax relief.

Let's clarify which expenses HMRC recognises as business-travel expenses. These are costs that you incur while travelling for work purposes, such as:

• Train, bus, or airfare
• Car or van rental
• Mileage if you use your own vehicle
• Hotel or other accommodation
• Meals and refreshments (yes, this includes alcohol)
• Parking fees
• Tolls and congestion charges

One of the most common of these travel expenses is mileage. If you use your own vehicle for work purposes, you will need to keep a record of the dates and distances you travel for work, as well as the reason for each trip. The Driversnote automatic mileage log book makes tracking these things as easy as can be.

You can read all about best practices and HMRC rules in our complete guide to mileage in the UK .

Mileage tracking made easy

Trusted by millions of drivers

Automatic mileage tracking and HMRC-compliant reporting.

As a rule of thumb, if the expenses were necessary for the work that was done, and if the reimbursement does not exceed the actual expenditure or per diem rates, the reimbursement will be tax-exempt.

You will need to keep records of your expenses as proof for your employer and/or HMRC.

In an effort to simplify the process of tax deductions and reimbursements, HMRC publishes predetermined rates to cover business travel expenses. These can be used instead of being imbursed for the actual costs you incur.

A benefit to per diem rates is that you will not have to save receipts or invoices, you will simply have to be able to prove that you were on a business trip when the expenses were incurred.

There are per diem rates for both travelling within the UK and to other countries. In the UK, the HMRC per diem rates change depending on the duration and circumstances surrounding the trip. For the rest of the world, HMRC has published a list with the rates for countries and/or cities. 

It is actually possible to negotiate higher rates than the standard ones set by HMRC. But this will require time and legal work.

If you incur travel expenses while doing your job, you have two channels through which you can recuperate your costs.

The most common practice is that your employer will reimburse you.

If you are not reimbursed in full, or at all, by your employer, you then have the option to claim tax relief on the remaining expenses you incurred because of your business travel.

If you are a sole trader your business-related travel expenses are deductible from your taxable profits. What qualifies as travel expenses and the amounts that can be claimed for them follow the same rules as they would for an employee.

As long as you either reimburse your employees’ actual business-travel-related costs, or pay them after the per diem rate (either the standard one or a bespoke one you have negotiated with HMRC), you will not have to report or pay taxes on the reimbursement, as per HMRC’s website .

You will, however, need to keep records of all expenses and benefits you provide to your employees. This includes records of when and why the travel took place, along with receipts where possible.

Tired of logging mileage by hand?

Effortless. HMRC-compliant. Liberating.

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Simplified expenses if you're self-employed

Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs.

You do not have to use simplified expenses. You can decide if it suits your business.

Who can use simplified expenses

Simplified expenses can be used by:

• sole traders
• business partnerships that have no companies as partners

Simplified expenses cannot be used by limited companies or business partnerships involving a limited company.

Types of expenses

You can use flat rates for:

• business costs for some vehicles
• working from home
• living in your business premises

You must calculate all other expenses by working out the actual costs.

How to use simplified expenses

Keep records of your business miles for vehicles, hours you work at home and how many people live at your business premises over the year.

At the end of the tax year use the flat rates for vehicle mileage , working from home , and living at your business premises to work out your expenses.

Include these amounts in the total for your expenses in your Self Assessment tax return .

Use the simplified expenses checker to compare what you can claim using simplified expenses with what you can claim by working out the actual costs. This will help you work out if simplified expenses suits your business.

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