There are almost 5 million self-employed people in the UK. Self-employment gives you control over every aspect of your business and allows your business finances to remain private and not available to be viewed on the public record as they are for a limited company through Companies House. It can also allow you to have a closer relationship with your customers, where they are dealing with you as a person, rather than a faceless company. As your business grows, it can sometimes be advisable to transition into working through a limited company to protect your assets and we would also point out to you when this could be beneficial because each setup has its own benefits.
We service a wide range of self-employed individuals across all industries, from local shopkeepers and tradesmen, to actors and individuals with multi-property rental portfolios.
It’s important to keep on top of your business costs as a self-employed individual and always remember that costs wholly and exclusively incurred by your business can be claimed, even seemingly insignificant expenses such as the fuel cost of driving to a Post Office to send a letter or parcel. More significant but less considered expenses such as a proportion of home utilities expenses can also be claimed if you work from home, clothing costs and membership of any professional bodies or trade associations. In some cases, HMRC do have very precise rules concerning the proportion of what you can claim for certain expenses so you should speak to us to ensure you are getting it right.
HMRC expect you to keep accurate records to backup any expense claims you put in, otherwise a claim can be refused. The easiest and most secure and reliable way of doing this is by using cloud-based software such as Xero and QuickBooks — we are accredited advisors for both of these and can offer discounted user licences. They offer smartphone apps which allow you to take a picture of a receipt or invoice and it automatically uploads it to your accounts and assigns the expense to the correct category therefore saving you time and money through our fees, as the software has done some of the work for us already. HMRC have declared that these electronic/online copies of receipts are sufficient enough to substantiate expense claims instead of collecting a mountain of paperwork and receipts at home.
From April 2024, individuals with a turnover greater than £10,000 must file their accounts through recognised software. You can read more on our information page here.
What expenses can I claim, being self-employed?
It’s a question we get asked throughout the year. Whilst there is no firm list of what you can claim, common sense should prevail when applying HMRC’s ‘wholly and exclusively’ rule and you should always speak to us if you are unsure. 100% of the cost of a mobile phone or contract can be claimed if it is used wholly and exclusively for your business, rather than having a dual purpose. For example, if your phone bill is £50 and you use it for business 50% of the time, then only £25 can be claimed as an expense. You can also claim the cost of our fees as professional fees.
How long do I need to keep records for?
Six years. HMRC can choose to investigate any of the previous six years of tax returns and accounts. There is no harm in keeping records for longer than this for peace of mind.
What is the current mileage allowance?
If you use your personal vehicle (car or van) for traveling to a temporary work location, you can claim 45p per mile on the first 10,000 miles, then it’s 25p per mile after 10,000 miles. Lower rates apply for motorcycles. It’s very important to keep an accurate record of all journeys you make in relation to your business as HMRC will expect you to justify whatever you claim, should they choose to launch a compliance check.
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