Expenses if you’re self-employed

This is one of a series of videos about online
Self Assessment. If you’re self-employed your business will
have various running costs. You can take away some of these costs to work
out your taxable profit as long as they’re allowable expenses. You can’t claim any expenses if you use
the £1,000 tax-free trading allowance. There’s more about this on GOV.UK Allowable expenses don’t include money you
take from your business to pay for private purchases. In other words, allowable business expenses
don’t include things like accommodation, food, clothing, holidays and any other things
you buy for you and your family. You need to keep records of all your business
expenses as proof of your costs. You add up all of your allowable expenses
for the tax year and put them on your Self-Assessment tax return. Don’t send in proof of your expenses when
you send your tax return to HMRC. Keep them so that you can show them to HMRC, if asked. You can choose to use ‘Simplified expenses’. This is a way of working out some expenses
using flat rates instead of working out your actual business costs. You don’t have to do this. You can decide
if it suits your business. Simplified expenses can’t be used by limited companies or business partnerships involving a limited company. You can use flat rates for:
• Business costs for vehicles • Working from home
• Living in your business premises 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. Then, at the end of the year, use the flat
rate to work out your expenses and include the amounts in your Self Assessment tax return. Find out more about this on the GOV.UK website. For other expenses, and if you decide not
to use simplified expenses, keep accurate records of what you buy and their costs. Here’s some commonly used business expenses: • Office property and equipment • Car, van and travel
• Staff • Legal and financial costs
• Marketing and subscriptions For the tax year 2017-18, if your business
income is £85,000 or more, you need to enter each expense under the appropriate heading. If you didn’t trade for a full year, but
if you had, and your income would have been more than £85,000 you need to enter each
expense in the same way. For example: If you traded from October to April, (that’s
six months), and your business income was £50,000, then your business income for a
full 12 months would have been £100,000. If your business income is below £85,000
for the full year, you can still list your expenses, but you can also choose to add them
all together and show them as a total figure on your Self-Assessment tax return. You’ll find more help and support on GOV.UK. Webinars and other videos about Self Assessment
are available from HMRC. Thanks for watching.

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