These are the standard HMRC allowable expense categories taken from the Self Assessment short form, and some useful examples:
1. Costs of goods bought for resale or used. This is an important one for those of you who sell tangible goods. Whether it is food, sculptures, or anything in-between. This category covers your stock and raw materials.
2. Accountancy, legal or other professional fees. Sometimes you need an expert. If you use a lawyer or an accountant to help you out from time to time, this is the category for those expenses. This category does not cover the legal costs of buying property, buying large items of equipment, the cost of settling tax disputes, or fines for breaking the law.
3. Wages, salaries and other staff costs. Being a one-man band can be a lot to take on. If you hire permanent or temporary staff, their costs can be claimed in this category. This category does not cover your own wages, drawings, pension payments or NICs.
4. Car, van and travel expenses. We all need to move around. But if you need to for your business, you can claim those costs in this category. Examples include fuel costs, hire charges, insurance, repairs and hotel rooms. You can’t claim non-business motoring costs, any fines, the cost of buying vehicles, travel costs between home and business, or meals when not on an overnight business trip.
5. Phone, fax stationary and other office costs. Staying connected is absolutely crucial to most businesses. Whether it is high-speed internet or old school postage stamps, those expenses are in this category. Other examples include your phone, fax, stationery and printing. You can’t claim non-business or the private use proportion of these expenses. Nor can you claim for a new phone, fax machine, or computer hardware, or other equipment costs if you use traditional accounting.
6. Repairs and renewals for property and equipment. Time takes its toll on everything. This category covers expenses related to resisting the physical decay of your business. Examples include premises repair or the renewal of small tools. This category does not cover repairs of non-business parts of a premises or equipment; or the costs of cosmetic improvements or alterations to premises and equipment.
7. Interest, bank and credit card etc. Whatever charges the bank makes in relation to running your business, you can claim as a deduction in this category.
8. Rent, rates, power and insurance costs. If you use a separate premises for your business, or a section of your home. You can claim rent, business rates, water rates, electricity and heating in this category. This does not cover the costs of any private part of the business premises or flat rate amount, if you live on the business premises. Nor does it cover the costs of buying the premises.
9. Other allowable expenses. This category covers you for things like trade or professional journal subscriptions. As well as other business running expenses not included in another category. These do not include payments to clubs, political parties, charities, or the cost of your ordinary clothing.