What Expenses Can Freelancers Claim?

The Principle of Allowable Expenses

Allowable business expenses reduce your taxable profit, which in turn reduces your Income Tax and National Insurance liability. HMRC's fundamental rule is simple: expenses must be incurred "wholly and exclusively" for business purposes.

This doesn't mean you can only claim expenses with zero personal benefit. Rather, the primary purpose must be business-related. Many expenses have legitimate business and personal elements, and specific rules govern how to handle these mixed-use situations.

The "wholly and exclusively" test:

• Wholly: The full expense relates to business
• Exclusively: The expense is not for personal purposes

For mixed-use expenses, you claim only the business proportion. A phone used 60% for business means you claim 60% of the cost. Documentation supporting your apportionment is essential.

Home Office Costs

Working from home generates several claimable expenses. HMRC offers two approaches: simplified expenses or actual costs.

Simplified expenses (flat rate):
HMRC allows flat-rate deductions based on hours worked at home per month:

• 25-50 hours: £10 per month
• 51-100 hours: £18 per month
• 101+ hours: £26 per month

This method requires no calculations or receipts — just record your working hours. However, the amounts are conservative. Full-time freelancers often find actual costs more beneficial.

Actual costs method:
Claim a proportion of your home running costs based on business use. Relevant costs include:

• Electricity and gas
• Council Tax
• Mortgage interest or rent
• Water rates (if metered)
• Home insurance
• Broadband and phone line
• Repairs and maintenance (of shared areas)

Calculating the business proportion:
Use a reasonable method, such as number of rooms (e.g., 1 room of 5 = 20%) or floor area. Then consider time: if you use the space for business 8 hours a day, 5 days a week, that's about 24% of the total hours in a week. Combine these factors reasonably.

Broadband and phone:
If your broadband is essential for work, claim the business percentage. A dedicated business phone line is 100% claimable. A mobile used for both purposes requires apportionment — track business vs personal calls for a sample period to determine a fair percentage.

Equipment and Software

Business equipment and software are generally allowable, subject to rules about capital expenditure and depreciation.

Small items and software:
Items with a short useful life or low cost (typically under £500) can be deducted in full in the year of purchase:

• Stationery and office supplies
• Software subscriptions (Adobe, Microsoft 365, etc.)
• Web hosting and domain names
• Minor equipment (keyboards, mice, cables)
• Books and professional publications

Capital equipment:
Larger items like computers, cameras, and furniture are capital expenditure. You can claim these through:

• Annual Investment Allowance (AIA): Claim the full cost (up to £1 million per year) in the year of purchase
• Writing Down Allowance: Spread the deduction over several years (18% of reducing balance annually)

Most freelancers use AIA for immediate full deduction. This means a £2,000 laptop can be fully deducted in the purchase year.

Mixed-use equipment:
If you use equipment for both business and personal purposes, claim only the business proportion. A computer used 80% for work means an 80% claim.

Travel Expenses

Travel for business purposes is deductible, but commuting is not. The distinction matters significantly for freelancers who travel to client sites.

What you can claim:

• Travel to client meetings and sites
• Public transport fares for business journeys
• Accommodation when travelling for work
• Subsistence (meals during business travel)
• Car expenses (fuel, parking, congestion charges)
• Flights and trains for business trips

Vehicle expenses — two methods:

• Simplified mileage rate: 45p per mile for first 10,000 miles, 25p thereafter. No need to track actual costs, just mileage.
• Actual costs: Track all fuel, insurance, repairs, road tax, and depreciation. Claim the business proportion based on business vs total mileage.

For most freelancers, the simplified rate is easier and often more generous than actual costs, especially for efficient vehicles.

Working from home — no commute:
Your home is your workplace. Travelling from home to a client site is business travel, not commuting. However, if you also have a regular office elsewhere, journeys between home and that office are commuting and not deductible.

Professional Development

Keeping skills current and gaining new capabilities directly benefits your business. HMRC generally allows:

• Professional training courses related to your work
• Conference attendance and fees
• Professional body memberships (ACCA, CIPR, etc.)
• Technical books and subscriptions
• Online course subscriptions (LinkedIn Learning, etc.)

The key test:
Training that maintains or updates existing skills is allowable. Training for a completely new profession or trade is generally not — it's considered capital investment in yourself rather than a business expense.

Conferences and events:
Registration fees are fully deductible if the event is business-related. Travel and accommodation are allowable if the primary purpose is business (not a holiday with some work attached).

Marketing Costs

Expenses to promote your business and win clients are generally allowable:

• Website design, hosting, and maintenance
• Business cards and printed materials
• Advertising (online, print, social media)
• SEO and content marketing services
• Photography for business use
• Portfolio development
• Business networking event fees

Client entertainment:
A significant exception: entertaining clients (meals, drinks, event tickets) is not tax-deductible, even if genuinely business-focused. You can still spend on client entertainment, but it doesn't reduce your tax bill.

What You Cannot Claim

Some expenses are specifically disallowed or commonly misunderstood:

Personal expenses:

• Everyday clothing (even if only worn for work)
• Commuting costs from home to a regular workplace
• Gym memberships (unless you're a fitness professional)
• Childcare costs
• Fines and penalties (parking tickets, HMRC penalties)

Entertainment:

• Client meals and hospitality
• Event tickets for clients
• Staff parties (different rules apply if you have employees)

Capital items with personal use:

• Watches, jewellery (even if worn to look professional)
• Non-business vehicles
• Home improvements (beyond the home office proportion)

Non-business purposes:

• Holidays (even if you do some work)
• Courses for a new career
• Political donations or lobbying

Record Keeping Requirements

Claiming expenses requires evidence. HMRC can request proof for any claimed deduction for up to six years (longer in fraud cases).

What to keep:

• Receipts and invoices for all purchases
• Bank statements showing transactions
• Mileage logs for vehicle claims
• Time records for home office hours (if using simplified expenses)
• Calculations for mixed-use apportionments
• Contracts and agreements supporting business purpose

Digital records:
HMRC accepts digital copies of receipts. Photograph paper receipts or use expense tracking apps. Ensure digital records are legible and securely backed up.

Missing receipts:
If you've lost a receipt, bank statements and other circumstantial evidence may support the claim. However, HMRC can disallow expenses without adequate evidence. Develop good habits — photograph receipts immediately or use accounting software with receipt capture.

Claiming all legitimate expenses reduces your tax bill and accurately reflects your business profit. When in doubt about a specific expense, consider whether you can satisfactorily explain to HMRC that it was necessary for your business. If yes, claim it with confidence and keep the documentation.