When calculating the actual amount of tax to you pay on your tax return, you can take into account any expenses ‘wholly and exclusively’ paid out for the purposes of your business, such as van expenses, tools and materials and administrative costs, including mobile phones.
In most cases it will be clear if something has been incurred wholly and exclusively for the purposes of your business, such as tools or materials. If you use something for both business and private purposes, a mobile phone or vehicle for example, you should keep evidence – mobile phone bills/mileage logs, etc. so that the appropriate proportion of business use can be identified.
Expenses
Typical business expenses are as follows:
Ordinary clothing
Expenditure on ordinary clothing worn during the course of a trade is disallowable- however, a deduction for protective clothing is normally permitted.
Food
The cost of food and drink is not usually an expense incurred for business purposes, since everyone must eat in order to live. However, where occasional business journeys outside the normal pattern are made, modest expenses incurred in these circumstances, for example, for a sandwich away from home, may be deducted.
Working away
The cost of domestic living accommodation is not allowable, although where a business trip requires one or more nights away from home, the hotel accommodation and reasonable costs of overnight subsistence may be deductible.
Use of home as office
You can claim flat rate expenses for working from home if you work there for at least 25 hours per month.
| Hours of business use per month | 2022/23 and 2023/24 flat rate per month |
| 25 to 50 | £10* |
| 51 to 100 | £18* |
| 101 and more | £26* |
Travelling to work
If you tend to work at one or two different sites during the year and there is a pattern – these one or two sites will be your normal working place and the cost of travelling between home and such places will likely be disallowed, as it is just ordinary commuting.
If your home is your business base (you may at times work there, keep your business records, materials, tools there etc.) and you work at many different sites during a year, any travel from home to the sites should be regarded as allowable travel.
Where you travel regularly at your own expense to a work ‘base’ (e.g. to receive instructions) and then are conveyed (at the contractor’s expense) to another location/s, you will have no allowable travel costs.
Motor expenses
You can claim a proportion of your actual motoring expenses or you can claim simplified expenses as below.
If you use the flat rate you do need to keep a record of your business miles – but not vehicle running or repair costs.
| Vehicle | 22/23 and 23/24 Amount per business mile with simplified expenses | What you can claim if you do not or cannot use simplified expenses | |
| Using the accruals basis | Using the cash basis | ||
| Cars and goods vehicles first 10,000 miles | 45p | Capital allowances and running costs | Capital allowances and running costs (for cars) or purchase costs (for goods vehicles) |
| Cars and goods vehicles after 10,000 miles | 25p | Capital allowances and running costs | Capital allowances and running costs (for cars) or purchase costs (for goods vehicles) |
Accruals basis – all relevant income and expenses are included whether received or paid in the year. Cash basis allows to record income and expenses when received or paid. If your annual income Is less than £150,000, you can elect on your self-assessment return to use the cash basis.