Business expenses you can report if you're self-employed

Cars, minicabs and other vehicles like vans and motorcycles

You can claim expenses for

• using a car or minicab for business travel if the vehicle is not specially adapted for business use but you must use simplified expenses (a flat rate)
• costs that are not a direct result of the purchase or use of the vehicle, for example minicab radio hire charges if they’re separate from vehicle hire costs or fees for business-specific licences such as the licence to drive a minicab
• other vehicles like a motorbike, a scooter or a vehicle that is specially adapted for business use (such as a van, black cab or driving instructor dual-control car)

You can claim these actual costs in addition to any simplified expenses.

You can’t claim expenses for the purchase or lease of a car or minicab if the vehicle is not specially adapted for business use.

Simplified expenses (flat rate) for car, vehicle and travel expenses

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

Use your online account to report how many miles you travelled for business that month.

A flat rate will then be used to calculate your costs:

For a car, van or other motor vehicle the flat rate is:

• 45 pence per mile for the first 833 miles
• 25 pence per mile for every mile over 833 miles

For motorbikes or scooters the flat rate is 24 pence per mile.

If you use the flat rate to record your car, vehicle or travel expenses, this includes all costs relating to your car, vehicle or travel for the month. You can’t claim expenses for any actual costs, for example fuel, servicing, repairs, vehicle insurance, road tax and MOT. These costs are included in the flat rate.

Other business travel

You can claim costs for business travel, including:

• public transport, for example train, bus and taxi fares
• air travel, hotel rooms and meals during overnight stays
• parking, tolls and congestion fees and  travel between home and the site, if you’re a sub-contractor who works at 2 or more sites during a year

You can’t claim costs for:

• commuting (travel between your home and your normal place of business)
• personal or non-business travel costs or penalties, such as parking fines

Place of business

Your ‘places of business’ are where you do your work.

You can claim running costs for these, including:

• rent of a business premises, such as an office or warehouse
• utility bills, for example water and electricity
• business rates and property insurance
• security and cleaning, repairs and maintenance
• purchase, repair and maintenance of business equipment, for example computers or printers

You cannot claim business expenses for:

• lunch
• buying places of business or any non-business use of business equipment

Tax, National Insurance and pension

You can claim business expense costs of any:

• income tax paid to HMRC on your self-employed earnings
• VAT paid to HMRC, if you report VAT-inclusive earnings
• Voluntary Class 2 National Insurance contributions
• Class 4 National Insurance contributions
• contributions paid into a registered pension scheme

These must be payments you actually made during the monthly reporting period, not estimates.

Legal and financial costs

You can claim business expenses for legal and financial work done for your business like:

• business loan interest (up to a maximum of £41 each month)
• accounting fees and legal fees
• insurance and bank charges
• your share of the expenses, if you’re in a business partnership
• expenses from a company that you own or have control over, for example where you are a director

You can’t claim the costs for capital repayments on a business loan.

Office and equipment costs

You can claim business expenses for office and equipment costs like

• phone, mobile and internet bills
• stationery and postage
• printing, including printer ink and cartridges
• computer software
• equipment or tools, including purchase, hire or repair
• any other office or equipment costs that are necessary and appropriate to your business

Staff expenses

You can claim business expenses for:

• staff and employee wages, including your salary if you pay yourself using PAYE
• subcontractor costs
• employer’s pension scheme contributions
• employer’s National Insurance contributions
• bonuses and benefits
• agency fees
• training courses related to your business

You can’t claim the costs of:

• carers or domestic help, for example nannies or gardeners
• wages paid to a business partner

Goods and materials and clothing for work

You can claim business expenses for goods and materials.  This includes:

• stock and goods for resale
• raw materials
• direct costs from producing goods
• any other goods and materials costs that are necessary and appropriate to your business

You can claim business expenses for work clothing such as

• uniforms and protective clothing needed for your work
• costumes, for example for actors or entertainers

You can’t claim the costs of normal clothing, even if you wear it for work

Payment in kind

You can claim business expenses for any work your business did as ‘payment in kind’ for goods or services. Payment in kind is when you pay using goods or services instead of cash.

Marketing and advertising

You can claim expenses for growing your business. This includes: advertising and marketing, free samples and website costs

Professional subscriptions and training courses

You can claim business expenses for professional subscriptions if they are related to your business. This includes:

• subscriptions to trade or professional journals
• trade body or professional organisation membership

You can claim expenses for training that helps you improve the skills and knowledge you use in your business (for example, refresher courses).

The training courses must be related to your business.

You can’t claim for training courses that help you start a new business or expand into new areas of business, including anything related to your current business

Entertainment or reselling goods

You can’t claim business expenses for event hospitality or entertaining clients, suppliers or customers.

You can claim business expenses for goods for resale (stock), raw materials and direct costs from producing goods

You can’t claim for any goods or materials bought for private use or depreciation of equipment

Business expenses when you use your home for business

You can claim business expenses for using part of your home for your self-employed work. For example:

• providing services to a customer, for example as a hairdresser or an artist
• essential business administration, for example filing invoices, recording payments or stock taking
• other business activities, for example sales and marketing activities

You cannot claim business expenses for using your home for:

• storage
• completing tax returns for HMRC
• self-reporting your earnings for Universal Credit
• being on call
• being available to carry out work

To claim business expenses for using part of your home for your self-employed work, you can either:

• calculate your actual business costs

or

• use simplified expenses (a flat rate) if you’ve worked more than 25 hours a month from home

Calculating actual business costs if you work from home

You need to find a reasonable way to divide your costs, for example by the number of rooms you use for business or the amount of time you spend working from home.

You may be able to claim some of your costs as business expenses for things like heating, electricity, internet and telephone use

Example

If you have 4 rooms in your home, and you use one room as an office.

Your electricity bill for the month is £100.

Assuming all the rooms in your home use equal amounts of electricity, £25 of this would be for the office (£100 divided by 4).

For each day you work from home in the month, you could claim £0.83 as an allowable expense (£25 divided by 30).

Reporting simplified expenses if using your home for self-employed work

To use simplified expenses, tell us how many hours you used your home for business purposes. We will use a flat rate to calculate your expenses.

This means that you do not have to work out the amount of personal and business use for your home. For example, how much of your utility bills are for your self-employed work.

If you use simplified expenses, you cannot also claim for actual costs.

You can only use simplified expenses if you work for 25 hours or more a month from home. If you work less than 25 hours you must work out actual costs.

Example

If you work 40 hours from home in a month, you should report £10.

Living at your place of business

If you live in a building primarily used for your business, such as a pub or B&B, you can claim expenses for some of the running costs.

You can either:

• use simplified expenses

or

• calculate your actual business costs

To use simplified expenses, calculate your total running costs and subtract:

You may be able to claim other business expenses.  More information is available on how to Report business income and expenses if you're self-employed

When to report your expenses to Universal Credit

You must report your self-employed expenses to Universal Credit once a month. You normally do this in your online account. You will be sent a text message or email when you need to report this.

If you have no self-employed income or expenses for that month, you must report this to Universal Credit. 

You will not get your Universal Credit payment until you have reported your business expenses. If you report late, your payment may be delayed.

If you are not able to report online, you’ll need to contact Universal Credit.

Find more information on how to report business income and expenses

You can find a printable booklet on Claiming Universal Credit if you are self-employed.