How to Claim Expenses on Tax Return for UK Freelancers

Understanding Allowable Expenses

Think of allowable expenses as the costs you incur purely for business purposes. HMRC has a pretty straightforward test for this: if you wouldn't have spent the money without your business, it's likely an allowable expense.

The keyword here is "wholly and exclusively" for business use. This doesn't mean you need to use something 100% of the time for work, it means the expense must be incurred entirely for business reasons. For example, if you buy a printer that you use 80% for business and 20% for personal stuff, you can still claim the full cost because you bought it for business purposes.

Here's where many freelancers get confused: they think everything needs to be used exclusively for business to qualify. That's not quite right. What matters is why you bought it in the first place. If you purchased that printer because your freelance work requires you to print documents, contracts, and invoices, then it's a business expense, even if you occasionally print a recipe or two.

The criteria HMRC uses is actually quite reasonable. They want to see that the expense is necessary for your business to operate, that it's not a personal cost you'd have anyway, and that it's reasonable in size relative to your business income. A £50,000 car might raise eyebrows if you're earning £15,000 a year as a freelance writer, but a £500 laptop probably won't.

One common misconception is that you need to choose between claiming something as a business expense or using it personally. Many freelancers think they can't claim their phone bill because they use their phone for personal calls too. Actually, you can claim the business portion of mixed-use expenses, we'll cover exactly how to do this later.

Common Allowable Expenses for UK Freelancers

Let's get into the meat of what you can actually claim. The good news is that most legitimate business costs are allowable, and the list is longer than many freelancers realise.

Office and Equipment Costs

Your workspace needs stuff to function, and most of that stuff counts as a business expense. Stationery might seem old-fashioned in our digital world, but if you're buying pens, paper, notebooks, or printer ink for business use, claim them. Same goes for postage, whether you're sending contracts to clients or marketing materials to prospects.

Computer hardware and software are big-ticket items that definitely count. Your laptop, desktop, tablet, printer, scanner, external hard drives, and even that fancy ergonomic keyboard can all be claimed. Software subscriptions are particularly important for freelancers, think Adobe Creative Suite, Microsoft Office, project management tools, or industry-specific software.

Don't forget about office furniture and maintenance costs. That desk chair that's saving your back during long work sessions? Claimable. The desk itself, filing cabinets, bookshelves, and even the cost of maintaining or repairing these items all count as legitimate business expenses.

Travel and Vehicle Expenses

If your freelance work involves meeting clients, attending networking events, or working from different locations, your travel costs add up quickly, and most of them are claimable.

Business travel expenses include public transport costs, accommodation when you need to stay overnight for work, and meals during business trips. Keep those train tickets, hotel receipts, and restaurant bills from business meals. Just remember that meals need to be during overnight business trips or with clients, your daily lunch doesn't count unless you're entertaining a client.

Vehicle costs can be claimed in two ways. You can either claim the actual costs (fuel, insurance, servicing, MOT, road tax, parking) and then work out the business percentage, or use HMRC's simplified mileage rates. Currently, that's 45p per mile for the first 10,000 business miles in a tax year, then 25p per mile after that.

The mileage method is often easier for most freelancers. Just keep a simple log of your business journeys, date, destination, purpose, and miles travelled. Your phone's notes app works fine for this, or you can use one of many mileage tracking apps available.

Home Office Expenses

Working from home has become the norm for many freelancers, and you can claim a portion of your household expenses as business costs. This is where things get interesting because you have two options: simplified expenses or actual costs.

The simplified method is straightforward, you can claim £4 per week (£208 per year) if you work from home regularly, or £10 per week (£520 per year) if you work from home exclusively. No calculations needed, no receipts required beyond proving you work from home.

If your actual costs are higher, you can calculate the business proportion of your home expenses instead. Work out what percentage of your home you use for business (usually based on the number of rooms), then apply that percentage to costs like heating, electricity, council tax, mortgage interest (not capital repayments), rent, and home insurance.

Your internet and phone bills can be claimed based on business usage. If you estimate you use your broadband 60% for business, claim 60% of the monthly cost. Same principle applies to your mobile phone bill.

Professional Services and Subscriptions

Running a freelance business often means paying for professional help and staying current in your field. These costs are almost always allowable expenses.

Accountant and legal fees are obvious business expenses. Whether you're paying for annual accounts, tax return preparation, or legal advice on contracts, these costs are necessary for running your business properly. Even the cost of professional indemnity insurance or legal expenses insurance counts.

Professional memberships and trade publications help you stay current and credible in your field. Whether it's a membership to a professional body, subscriptions to industry magazines, or access to trade websites, these are legitimate business costs.

Training courses and continuous professional development are particularly important for freelancers who need to keep their skills sharp. Online courses, workshops, conferences, and even books related to your field can all be claimed as business expenses.

Marketing and Advertising

Getting your name out there costs money, but it's money well spent, and it's all claimable as business expenses.

Website development and hosting costs are standard business expenses for most freelancers. This includes domain registration, hosting fees, website design costs, and ongoing maintenance. If you're paying for premium themes, plugins, or website builders, those count too.

Online and offline advertising covers everything from Google Ads and Facebook advertising to traditional print ads or radio sponsorship. Business cards, flyers, brochures, and other promotional materials all count as marketing expenses.

Even promotional materials and free samples can be claimed. If you're giving away branded merchandise or free samples of your work to attract clients, the cost of producing these items is a legitimate business expense.

Financial Costs

The cost of managing your business finances is itself a business expense. Bank charges on your business account, interest on business loans or overdrafts, and credit card fees for business transactions can all be claimed.

Insurance premiums for business-related policies are allowable expenses. This includes public liability insurance, professional indemnity insurance, and even business equipment insurance. If you're required to have certain insurance to work with particular clients, those premiums are definitely claimable.

Bad debts can be tricky, but if a client genuinely can't or won't pay you, and you've made reasonable efforts to collect the debt, you can claim it as a business expense. You'll need to show that you've included the income in a previous tax return and that the debt is genuinely irrecoverable.

Non-Allowable Expenses

Not everything you spend money on can be claimed as a business expense, even if it feels business-related. HMRC has some clear rules about what doesn't qualify.

Personal expenses are the obvious ones that can't be claimed. Your personal mobile phone contract, gym membership, or weekly grocery shop don't become business expenses just because you're self-employed. Even if you occasionally take a business call at the gym or buy coffee for a client meeting during your weekly shop, these remain personal expenses.

Mixed-use costs need to be split carefully. You can claim the business portion, but you can't claim the whole amount. Your home broadband is a good example, if you use it 50% for business, you can claim 50% of the cost, but not the full amount.

Client entertainment and gifts have strict rules. You generally can't claim the cost of entertaining clients, so that expensive dinner you bought for a potential client isn't claimable. Small gifts to clients (under £50 per person per year) can be claimed, but only if they're not food, drink, tobacco, or vouchers, and they advertise your business.

Fines and penalties are never allowable expenses. Parking tickets, speeding fines, or penalties from HMRC can't be claimed as business expenses, even if they occurred during business activities.

How to Keep Track of Your Expenses Without Stress

Good record-keeping isn't just about satisfying HMRC, it's about making your life easier and ensuring you don't miss out on legitimate claims. The key is finding a system that works for you and sticking to it.

Maintaining accurate records doesn't have to be complicated. At its simplest, you need to keep receipts and invoices that show what you bought, when you bought it, how much you paid, and what it was for. A shoebox full of receipts technically meets HMRC's requirements, but it's not going to make your life easy come tax time.

Digital tools and software can transform expense tracking from a chore into something almost automatic. Many accounting apps can photograph receipts, categorise expenses automatically, and even integrate with your bank account to track spending in real-time. Popular options include Xero, QuickBooks, and FreeAgent, but even a simple spreadsheet can work if you keep it updated regularly.

The trick is to record expenses as they happen, not leave everything until the end of the tax year. Spend five minutes each week updating your records, and you'll save hours of stress later. Take photos of receipts immediately, your phone's camera is perfectly adequate for this, and many apps can automatically extract the key information.

HMRC requires you to keep records for at least five years after the submission deadline for the relevant tax return. For most freelancers, this means keeping records for at least six years from the end of the tax year they relate to. Digital records are fine, you don't need to keep physical receipts if you have clear digital copies.

How Virtue Accountants Can Help Claim Expenses on Tax Return

Managing expenses and tax returns can feel overwhelming, especially when you're trying to focus on growing your freelance business. That's where professional help can make a real difference.

Our online accounting services for freelancers are designed specifically for people like you, freelancers who want their finances sorted without the hassle. Starting from just £29.50 per month, we at Virtue Accountants handle everything from expense tracking to tax return preparation, so you can focus on what you do best.

We use cloud-based systems that integrate with your bank accounts and credit cards, automatically categorising expenses and flagging anything that needs your attention. Our mobile app lets you photograph receipts on the go, and our team reviews everything to make sure you're claiming all the expenses you're entitled to while staying on the right side of HMRC rules.

The best part? We speak plain English, not accountant jargon. When we explain something, you'll actually understand it. We're here to make your financial life simpler, not more complicated.

Final Thoughts

Learning how to claim expenses on tax return as a UK freelancer isn't as complicated as it might seem at first. The key principles are straightforward: if you spent money wholly and exclusively for business purposes, you can probably claim it. Keep good records, be honest about mixed-use expenses, and don't try to claim personal costs as business expenses.

Remember that claiming legitimate expenses isn't just allowed, it's expected. HMRC knows that running a business costs money, and the tax system is designed to account for that. You're not trying to get away with anything; you're simply ensuring you only pay tax on your actual profit after legitimate business costs.

The most important thing is to start keeping proper records now, even if your system isn't perfect. A simple spreadsheet updated weekly is infinitely better than a shoebox full of receipts at the end of the tax year. As your freelance business grows, you can always upgrade to more sophisticated systems or professional help.

Don't let the fear of getting something wrong stop you from claiming legitimate expenses. HMRC's guidance is generally clear, and if you're genuinely unsure about something, it's always worth asking for professional advice. The cost of that advice is itself a claimable business expense, after all.