Tax allowances and reliefs if you're self-employed

Allowable and non-allowable business expenses

A business expense is allowable if it:

  • isn't capital expenditure
  • isn't specifically non-allowable
  • is wholly and exclusively for business purposes

The most common expenses that are normally allowable include:

  • cost of stock
  • payroll costs
  • premises costs
  • repairs
  • motor and travel expenses
  • finance costs
  • administration costs
  • professional fees

Expenses incurred for both business and private purposes

Expenditure for a mixed private and business purpose is non-allowable expenditure. An example would be the cost of travelling to town to bank the business takings and do your private shopping at the same time.

If you can separate the expenditure between business and private purposes, the business part is allowable. So, if you use a car separately for business and private purposes, the proportion of the expenses that relates to:

  • business use is allowable
  • private use is non-allowable

You normally work out the allowable business and non-allowable private proportions based on the mileage covered for each.

    Developed with:

    HM Revenue & Customs