Self Assessment expenses: what freelancers miss every year

Most freelancers and sole traders file their own Self Assessment return and underclaim their expenses. Not through dishonesty — through not knowing what qualifies. HMRC does not send a checklist. The rules sit in legislation and guidance that assumes you already know where to look.

These are the six expense categories that get missed most often, and how to handle each one correctly. Getting them right is not aggressive tax planning — it is claiming what you are legally entitled to.

The home office expense most people get wrong

If you work from home, you can claim a portion of your household costs against your self-employment income. There are two methods: the actual costs method and the flat rate.

The flat rate is simple: £6 per week (£312 per year), no evidence required, no calculation. It sounds appealing until you run the numbers.

The actual costs method calculates the proportion of your home costs attributable to your work. You take your eligible household expenses — mortgage interest or rent, utilities, broadband, council tax — identify what proportion of your home is used for work (by floor area or room count), and apply that fraction to each cost. For many freelancers, this produces a significantly larger deduction.

The catch with actual costs: the space must be used at least partly for work. A dedicated home office is the clearest case. A kitchen table used for a few hours a day is defensible but requires a more careful calculation.

Phone and internet — calculating the business percentage

You can claim a portion of your phone and internet bills for business use. You cannot claim 100% unless you have a dedicated business-only line — which almost nobody does.

The realistic approach: estimate what percentage of your calls, data, and internet time is genuinely business-related. For most sole traders, a figure between 50% and 80% is defensible. Keep a log for a representative month — it does not need to be permanent, just sufficient to demonstrate your reasoning.

Claiming 100% is a red flag for HMRC. Claiming 65% on a credible, documented basis is worth more than claiming 100% and being challenged on it.

Equipment and software — the Annual Investment Allowance explained

When you buy a laptop, camera, desk, or any other piece of equipment for your business, you are making a capital purchase — not a day-to-day expense. That distinction matters for how and when the cost is deducted.

The Annual Investment Allowance (AIA) allows you to deduct the full cost of qualifying capital purchases in the year you buy them, up to £1 million. For most freelancers, this means the entire cost of any equipment purchase goes against your tax bill in the year of purchase — immediately, not depreciated over several years.

Timing matters. If you are considering a significant equipment purchase near the end of a tax year, buying before 5 April rather than after can bring the deduction into your current return rather than the next one.

Software works differently. Subscription software (Xero, Adobe, Microsoft 365) is a recurring business expense — fully deductible each year. A one-off software licence may be treated as capital, in which case the AIA applies.

Professional subscriptions and training

Professional body memberships directly related to your trade are deductible. HMRC publishes a list of approved organisations that includes bodies such as the CIPD, Law Society, ICPA, and many others. If your professional body appears on that list and the membership is necessary for your work, the annual subscription qualifies.

Training is where freelancers leave money behind most often. The rule is that training must maintain or update skills you already use in your current trade. A freelance copywriter doing a journalism refresher course — deductible. The same copywriter doing a coding bootcamp to change careers — not deductible.

Books, journals, and reference materials directly related to your work also qualify. The test is always the same: is this directly connected to the trade you are already carrying on?

Travel — the rules that trip people up

Commuting to a regular, permanent workplace is never deductible. But most home-based freelancers do not have that kind of commute. If your base of work is your home, travelling to a client’s premises is not commuting — it is a business journey.

The key nuance is the 24-month rule. If you attend a client’s workplace regularly, and that engagement is expected to last (or does last) more than 24 months, the client’s office becomes a permanent workplace and travel costs stop being deductible. If the engagement is genuinely temporary and expected to end within 24 months, travel costs qualify throughout.

For car journeys, the approved mileage rate is 45p per mile for the first 10,000 miles in the tax year, then 25p. You cannot also claim actual running costs if you are using the mileage rate. Keep a log with dates, destinations, and business purpose.

Train, bus, and taxi receipts for business journeys are straightforward — keep the receipts. Overnight accommodation and subsistence on genuine business trips also qualifies, within reason.

The simplified expenses trap

HMRC’s simplified expenses scheme lets sole traders use flat rates instead of calculating actual costs for three categories: mileage (45p per mile), home working (£6 per week), and certain vehicle expenses. The appeal is simplicity.

The problem is that simplified expenses often produce a smaller deduction than actual costs — and once you choose a method for a given expense category, switching later is not straightforward.

The most significant trap is vehicle expenses. If you use a car intensively for business and the actual costs (fuel, insurance, servicing, depreciation) are substantial relative to your mileage, the flat-rate approach may leave you underclaiminig. Run both calculations before you commit. And if you begin using actual costs for a vehicle, you must continue with that method for as long as you own it.

If you are filing your own Self Assessment and you are not sure whether you have claimed everything you are entitled to, book a free consultation and we will review your expenses before you submit. A one-off review often recovers more than the cost of the consultation.