Tax Relief for the Self-Employed

Self-employment can be hard work because as well as doing your job, you’re also dealing with marketing, sales, and of course, accounting. When you’ve gone to all that effort to start, grow, and manage your business, it can be a little galling when you realise a lot of your hard-earned income is subject to tax.

Fortunately there are all sorts of ways you can claim tax relief and allowances which will help reduce your tax bill. We’re not talking about tax evasion or anything dodgy, so in this article we’ll share our accountant’s favourite tax-saving tips.

Claiming tax relief on business expenses and costs

Claiming tax relief on allowable expenses is a great starting point for every self-employed person, because rather than paying tax on everything you earn during your tax reporting period, you can deduct any expenses first so you’re only taxed on the remainder.

Unfortunately, lots of businesses miss out on claiming everything they’re entitled to. For some people, it’s the terror of getting it wrong and ending up in trouble with HMRC that puts them off. For others, it’s simply a case of forgetting to keep a record of every transaction.

Good bookkeeping will make sure you have a record of absolutely everything going out and coming in which will make it much easier to work out what you can claim.

Tax relief on the cost of working from home

Many people use their homes as their business HQ, whether as a home office, workshop, storage space, or all of the above. It can sometimes be a bit complicated though, because you’re only allowed to claim for the proportion of your household costs which relate to your business.

With this in mind, there are two methods you can use to work out your expenses for working from home:

• Flat rates: Sometimes also known as simplified expenses, these rates are set by HMRC. Only sole traders and partnerships can use this method, and that’s only if you use your home as a workspace for a minimum of 25 hours each month.
• Proportional costs: Claim a percentage of your total household costs by determining the proportion of your home used for business, and the amount of time you use it for

Travel expenses

We’ll start with the most common question first: no, you can’t claim travel costs for going to your place of work. HMRC don’t allow business owners to claim relief for their usual commute to the office, but you can claim costs for other trips, such as visiting clients or fetching stock.

Accommodation and subsistence costs

It’s also acceptable to claim accommodation costs and the reasonable value of a meal if you’re staying away from home for business purposes (known as subsistence costs). For example, you might decide to stay overnight at a hotel if you’re taking the train to visit a client 400 miles away.

Take the short online quiz to see what sort of food and drink expenses you might be able to claim.

Tax relief on vehicles

The rules around claiming expenses for vehicle costs can be really confusing, with sole traders and limited companies having different guidelines.

As a general rule, you’ll need to keep detailed travel logs for every single business journey showing things like the start and end point, the purpose of the trip, and what type of vehicle you used. This is a big subject, so we have a collection of guides covering it in more detail.

Special clothing and tools

You may be able to claim tax relief for any specialist clothing or equipment you need for work. As always though, it’s only an allowable expense if it’s used exclusively for the business – but this can be a bit tricky to prove.

For instance, a personal trainer obviously needs sports clothing for work, but HMRC argue this clothing can also be worn for their own private exercise.

You’ll normally be ok claiming clothing as an expense in your business if it’s part of a branded uniform, a costume, or it’s protective clothing – but get advice if you’re not sure!

Don’t forget your tax allowances

• Personal tax allowance: Every person in the UK has a personal tax allowance which, for the 2026/27 tax year, is £12,570. This means you can earn up to that amount before you need to start paying any tax.
• Trading allowance: If the income you earn from self-employment, a side-hustle, or from property is less than £1,000 in a tax year, you don’t have to register for Self Assessment or pay tax on it. If you do go over the threshold, you can offset the trading allowance against your profits in order to pay less tax (unless you have more than £1,000 in allowable expenses, in which case – claim those!).

Sharing a tax allowance with your spouse

If you have a spouse who isn’t working or who is on a low wage, then the Marriage Allowance lets them transfer £1,260 of their Personal Tax Allowance to you.

It’s a handy top-up that means you still get the benefit of their allowance if it’s otherwise likely to go unused. Under current rules you can only make use of it if you are married or in a civil partnership.

Charitable donations

As long as the organisation is a registered charity or a community amateur sports club (CASC), then you get tax relief on your donation. Charities using the Gift Aid scheme will also be able to reclaim the value of your tax on the gift. They will ask you if you are a UK taxpayer when you give.

Businesses can also offset the cost of sponsorship against their profits, but individuals (such as sole traders) must treat any gifts of stock or cash as personal drawings which are then gifted as an individual, not as a business.

Using tax relief on assets to reduce your bill

As well as the day-to-day costs of running a business, like fuel, stationery and other consumables, you might also spend money on assets. Assets are things that tend to stick around for longer than a year rather than getting used up – such as machinery, vehicles, and computers.

Sometimes known as fixed assets (or capital assets), you might be able to claim capital allowances on their value. This can be a very complex area, so our guide to capital allowances goes into a lot more detail.

Claiming on R&D

If your business carries out research and development (R&D) work as part of its activities, you might be able to claim tax relief on the costs of doing so. Often known as R&D Tax Credits, the scheme offers companies an incentive for innovation. The rules (and relief available) can be a bit confusing, so we explain it in more detail in our article about R&D Tax Relief.

Tax rules are notoriously difficult to understand! Learn more about our online accounting services to help businesses with their tax. Call the team on 020 3355 4047 and get an instant quote online.