Master Your Side Gig Finances: Simple Tips to Claim Business Expenses in the UK

Starting a side gig is an exciting step towards pursuing your goals and increasing your income. However, when it comes to tax season, things can get a little overwhelming—especially if you're not familiar with claiming business expenses. Understanding how these deductions work can make a huge difference, reducing your tax bill and helping you keep more of what you earn.

If you're a freelancer, small business owner, or a side hustler in the UK, this guide will walk you through what business expenses are, what you can claim, and how to keep everything organised for a stress-free experience.

What Are Business Expenses, and Why Do They Matter?

When you're running a side gig, every penny counts. Business expenses refer to the costs you incur while earning income. These can often be deducted from your taxable profits, ultimately reducing your tax bill. More savings mean more funds to reinvest in your hustle or simply keep in your pocket!

Here are some examples of what can qualify as a business expense in the UK:

• Buying supplies for your business, such as packaging materials or equipment
• Software costs, like subscribing to tools for bookkeeping, design, or project management
• Your internet bill, especially if you work from home and use it for your business

Understanding business expenses is particularly crucial for newcomers who may not yet be familiar with the tax system. Not claiming these deductions means you could be paying more tax than you have to.

Why Startups and Small Businesses Should Care

Small businesses and side gigs often operate on tight budgets. Properly claiming your expenses allows you to maximise your profits. For first-time freelancers or online business owners, this can mean the difference between profit and loss during the crucial early months.

What Expenses Can You Claim?

Not every pound you spend qualifies as a deductible, but there’s a broad range of costs that do. The UK government provides clear guidelines about what counts as a valid expense. Here’s a breakdown of some common categories that side giggers and small businesses can claim.

✅ Expenses You Can Claim

1. Tools and equipment: From cameras to laptops, if it’s essential for your business, it’s claimable.
2. Office costs: Whether you work from home or rent office space, you can claim expenses like stationery, printing, and utilities.
3. Travel: Public transport, fuel, and even hotel stays for business-related trips are allowable deductions.
4. Marketing Costs: Advertising, website fees, and branding materials all count.
5. Household bills: If you work from home, you can claim a portion of bills like electricity, gas, and internet based on how much of your home is used for work.

🚫 Expenses You Can’t Claim

1. Personal expenses: If it’s not entirely for business use, it won’t qualify. For instance, you can't claim clothing, unless it’s a uniform or protective gear.
2. Meals and entertainment: While you can claim meals during work trips, day-to-day dining or entertaining clients isn't deductible.
3. Fines and penalties: Parking tickets or late payment fines are not allowable expenses.

Grey Areas Explained

Some items fall into a bit of a grey area. For example, if you use your mobile phone for both personal and business use, only the business calls and data usage are deductible. Keeping detailed records will help you split these expenses accurately and claim what you’re entitled to while staying within HMRC rules.

How to Keep Track of Your Expenses Without Stress

Managing receipts, invoices, and monthly bills can feel like a chore, but it doesn’t have to be. Staying organised is essential if you want a smooth tax season (and fewer headaches). Here are a few practical tips to help you keep everything in order.

Use Digital Tools

• Expense Tracking Apps: Apps like QuickBooks, Xero, or FreeAgent are fantastic for logging and categorising expenses on the go.
• Spreadsheets: A basic Excel or Google Sheet can also work wonders if you prefer a low-cost solution. Create columns to track dates, amounts, descriptions, and receipts.

Save Your Receipts

For every claimable purchase, make sure to store the receipt. An easy way to organise this is by snapping photos of your receipts with your phone and storing them in folders on your cloud drive or app.

Regularly Review Your Finances

Set aside 15–30 minutes every week to review your expenses. This will not only save you time during tax season but also help you make smarter financial decisions for your business throughout the year.

Pro Tip: HMRC recommends keeping business expense records for at least 6 years.

Keep More of What You Earn

Starting a side gig is challenging enough without overpaying on tax. Taking the time to learn how to claim business expenses is one of the smartest decisions you can make to strengthen your financial footing.

By knowing what qualifies as an expense, keeping your records organised, and confidently filing your Self Assessment, you can save yourself time, stress, and money.

If you're still unsure or need support with tracking your finances, working with an online accountant can provide peace of mind. Many offer tailored plans for small businesses and freelancers just like you.

Here’s to maximising your earnings and growing your side gig into something bigger!

Virtue Accountants

Our online accountancy services are designed to take the hassle out of managing your finances. Whether you’re a freelancer, small business owner, or side hustler, we offer tailored plans to fit your needs and budget. You’ll benefit from expert guidance, stress-free financial management, and the confidence that your tax affairs are handled efficiently.

Why spend time worrying about receipts and deductions when you can focus on growing your side gig? Partner with us, and we’ll help you maximise your earnings while giving you the peace of mind you deserve. Get started today and take one step closer to turning your side hustle into a success story!