No (allowable) expense spared

Business expenses add up to reduce profits thus reducing your tax liability. You’ll need evidence of all these expenses so keep all receipts for anything that can be reasonably construed as a business expense. Yes, even that bus ticket on the way to town to buy stationery, another legitimate business expense!
Technically speaking, allowable business expenses must be "wholly and exclusively" business related. However you can usually claim for the business proportion of mixed business and personal expenses eg motor expenses for a car used both in the business and personally.
Expense categories are the analysis, or breakdown, you apply to your overheads eg the cost of business cards could be filed under Stationery. However it makes sense for sole traders to use the same expense categories as are found on the self assessment form. In that way when you come to fill out the form, all your expenses will already be sorted into the appropriate category for HMRC’s analysis.
Here are the business expense categories recognised by HMRC for self assessment along with clues as to what’s allowed and what’s not. The short headings I use, whilst not very descriptive, are suitable for use as column headers in an analysed cashbook on paper or in spreadsheet form where space is at a premium. Below these, in italics, are the exact headings HMRC uses on the self-employment pages.
NB If you’re VAT registered, deduct the VAT amount first. If not, use the whole VAT inclusive amount.

Cost of sales
Cost of goods bought for re-sale or goods used
You can claim for the cost of raw materials or goods for resale. Include all other costs associated with the sale of a product or service eg carriage charges.
Any commission payable or outsourcing used in the provision of a product or service should go here along with any sales discounts given.
If you have a trade you can also claim for the cost of small tools here eg an electrician’s screwdrivers etc.
If you are a taxi driver or road haulier then you can claim for the cost of fuel (except that used privately.)
The cost of depreciation of equipment used in the manufacture of a product must not go here but you may be able to claim capital allowances on it.
Construction industry subcontractors can claim for the cost of raw materials and equipment hire here but the cost of using subcontractors should go below.

Construction subcontractors
Construction industry – payments to subcontractors
The cost of using construction industry subcontractors should go here but put the cost of raw materials etc above. Include the total cost of paying subcontractors before deductions for CIS tax.

Employee costs
Wages, salaries and other staff costs
Costs of employees other than yourself or your business partners eg salaries, pension benefits, redundancy payments, training costs, employer’s National Insurance Contributions (NIC’s), cost of using locums and subcontractors (but not construction industry, see above.)

Motor/travel expenses
Car, van and travel expenses
You cannot claim for the cost of buying a motor car as this is capital expenditure which may entitle you to capital allowances. Nor can you claim for any costs arising from personal use of a motor car that is used both in business and personally. You can claim for the business proportion of fuel costs, insurance, servicing and repairs, parking costs and AA/RAC membership.
You can claim for the cost of travel and hotel accommodation but you cannot claim for the cost of travelling to your office or workplace. Meals and general subsistence can only be claimed on overnight stays.

Premises costs
Rent, rates, power and insurance costs
If you work from home then you can claim a proportion of your utility bills and rent. It’s possible also to claim on a proportion of your council tax and mortgage interest payments. However this could have Capital Gains Tax (CGT) implications on selling your home so tread with caution and do the research first! See also FAQ: Can I claim for use of home?.
Claiming on a proportion of your council tax could land you with having to pay business rates on your property so probably isn’t worth bothering with.
If you rent an office, then similarly you can claim for utility bills and office rent and service charges (eg cleaning.) You cannot claim on the purchase of premises as this falls under capital allowances rather than expenses per se.

Repairs and renewals of property and equipment
You can claim for the cost of any repairs to business equipment and premises. However you cannot claim for improvements to business premises as these come under capital expenditure and therefore may entitle you to capital allowances.

General admin expenses
Phone, fax, stationery and other office costs
Most of your expenses will probably come under this category. You can claim for the business proportion of phone bills, internet connection, printing. postage, couriers, stationery and general office expenses.
Don’t include payments to political parties, churches, clubs or charities as these are disallowed.

Advertising and business entertainment costs
You can claim for the cost of marketing your product or service eg newspaper and web advertisements, business directory entries, Yellow Pages etc, mailshots and free product samples. Free gifts that clearly advertise your product and costing less than £50 are also allowed but these must not be gifts of food, drink, tobacco or vouchers.
Staff entertainment costs go here too but they must be less than £150 per head per annum. However entertaining prospective or current clients is not an allowable business expense.

Interest on bank and other loans
You can claim for interest payments on a business loan or overdraft but cannot claim for the capital repayments.

Other finance charges
Bank, credit card and other financial charges
Allowed expenses include bank and credit card charges, leasing payments and interest on hire purchases etc.
As above disallowed expenses include capital repayment of an overdraft or loan.

Bad debts
Irrecoverable debts written off
You can claim for amounts owing to you that you do not expect to receive. These must be specific amounts actually owed to you rather than a generalised slush fund for the provision of bad debts.
Any bad debts that you claimed for previously that have unexpectedly turned good in this accounting period should be entered as other income.

Accountancy, legal and other professional fees
These costs include accountant’s and solicitor’s fees, professional indemnity insurance etc but not the legal costs of settling tax disputes or legal costs and fines arising from illegal activities.
Legal and professional costs associated with buying fixed assets are not allowed, rather they are considered to be a component cost of the asset itself.

Other expenses
Other business expenses
This is the catch-all expense category into which you put all your expenses not claimed for elsewhere eg recurring costs like insurance and trade journal subscriptions. Try not to overuse it.

Capital expenditure

You cannot claim for any capital expenditure but you may be entitled to capital allowances.
The cost of buying fixed assets like plant & machinery, tools including computers, vehicles, business furniture and premises or the cost of improvements or alterations to them come under capital expenditure and so are not able to be claimed as business expenses. Depreciation of these fixed assets is not an allowable expense either but you should be able to claim it as a capital allowance. The same applies to patents and R&D.

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