Are you a Freelancer and unsure about the accounting and tax requirements to keep you compliant? Are you unsure about the expenses you can deduct to ensure you are not left with a large tax bill? 

As a self-employed Freelancer, the amount of tax you owe will depend on how much money you earned during the tax year (and accounting period if a limited company), but there are some expenses you can deduct to reduce your tax liability.

You are permitted by HMRC to write off the cost of a number of purchases that you make in order to operate your business. These expenses can be subtracted from your income, which will reduce your profit and in turn reduce the tax you owe.

Self-employed Freelancers frequently forget to submit proper expense claims, which might range from a new laptop to insurance coverage to general stationery purchases. In this article, we aim to provide you with some of the key information you need to prevent losing a significant portion of your income on unclaimed business expenses.

We are a UK firm of Chartered Accountants and provide specialist accounting and tax services for Freelancers.

If you require help with your accounting and tax, contact us today and we can talk you through the entire process as well as advise on whether you should register for VAT and operate as an individual or limited company!

To speak directly to an accountant, please e-mail your enquiry to contact@accountantforfreelancers.co.uk

Office, property and equipment
You must perform some administrative tasks as a Freelancer to stay on top of your accounts, spending, and taxes. You then accrue claimable business costs as a result.

You can claim for:

• Office consumables such as printer paper and ink
• Phone and internet bills plus software subscriptions – such as online accounting
• Use of home allowance for performing administrative tasks from home

Travel
All Freelancers incur travel expenses. These may vary from month to month depending on where you are working. The good news is that many of your travel expenses can be claimed back:

You can claim for:

• Mileage incurred on your personal car while travelling  on work duty, apart form the travel to your normal place of work
• Parking costs or bus, train, air or taxi fares
• Hotel rooms and meals on overnight stays

You cannot claim for:

• Parking or speeding fines
• Clothing expenses

Professional Fees

You can claim for a range of professional fees. 

You can claim for:

• Professional indemnity insurance premiums
• Business bank account and credit card charges
• Hiring an accountant

You cannot claim for:

• Fines for breaking the law
• Loan or hire purchase repayments

Marketing, entertainment and subscriptions
There are many other areas of being a Freelancer that will generate expenses that can be offset against your tax, these may be promoting your services, journals you subscribe to or even entertaining.

You can claim for:

• Your registration payments and professional membership dues to organisations.
• Relevant trade publications
• Advertising and website costs

You cannot claim for:

• Gym membership or payments to political parties
• Buying your colleagues a drink at the pub

The key takeaways from this article are…

• All expenses must be wholly and exclusively related to operating as a self employed Freelancer. HM Revenue & Customs may ask you to provide evidence of this i.e. you must have actually incurred the expense.
• Whether you prefer to keep a physical copy or a digital copy make sure you keep your receipts as HMRC can request to see them anytime during the 7 years after the expense was incurred.
• Since expenses are subtracted from your annual income and you are only taxed on your profit, your tax bill will be lower with the more expenses you have. However, keep in mind that even while expenses are tax deductible, they still represent a cost deducted from your profits, so only purchase things that you truly require.

To keep yourself on the right track don’t forget that all expenses should be discussed with your accountant to ensure that they are valid claims.
If you are looking for an accountant to help and guide you with your accounting and tax needs, please get in touch. You can e-mail us, contact@accountantforfreelancer.co.uk.