What does it mean to claim a business expense?

It means deducting an allowable business cost from your income before tax is calculated, so you are taxed on your profit rather than your full income. The expense is not refunded; it lowers the figure your tax is worked out on. If you earn 50,000 with 12,000 of expenses, you are taxed on 38,000.

What business expenses can a self-employed person claim?

Costs incurred to run the business: office and workspace, business travel, the business share of vehicle and phone costs, software and tools, professional and accountancy fees, business insurance, marketing, and equipment (often deductible in full through a capital allowance). The categories vary by country, so check your local rules.

Can I claim an expense that is part personal and part business?

Usually only the business proportion. For a home office, phone or car, work out a fair, consistent split you can justify, and claim that share. You cannot claim the personal part. Some countries offer flat-rate methods that simplify the split, such as a set home-working rate or a mileage rate.

What business expenses are not allowed?

Generally: personal spending, everyday clothing, commuting between home and a regular workplace, fines and penalties, and (in some countries) client entertaining, with meals often only partly deductible. Food is a grey area. When a cost is near the line, confirm it with your accountant rather than assuming.

How long do I need to keep expense records?

Long enough to prove a claim if asked, which is several years in most countries: the UK expects records for about five years after the filing deadline and the US generally three, sometimes longer. Keep every receipt and invoice, and keep business money separate from personal, so your expenses are easy to evidence.

Money and tax28 October 2026·9 min read·Written by Remit Team

What Business Expenses Can You Claim?

Claiming business expenses is one of the simplest ways to lower your tax bill when you are self-employed, and one of the most misunderstood. Every allowable cost you record reduces your taxable profit, so money spent running the business is not taxed as income. The catch is knowing what actually counts, how to handle costs that are part business and part personal, and keeping the records to back it up. This guide covers the one test that decides it, a practical list of what you can usually claim, how to split mixed costs, what is not allowed, and the record-keeping that makes it all stand up. It is general business information, not tax advice; the rules and figures vary by country and change, so confirm your position with your accountant or revenue authority.

A self-employed person sorting receipts to work out which business expenses are tax deductible

What "claiming an expense" actually means

A business expense is a cost you incur to run your business, and claiming it means deducting it from your business income before tax is worked out. If your business income (turnover) is 50,000 and you have 12,000 of allowable expenses, you are taxed on 38,000 of profit, not on the full 50,000 (an illustrative example). The expense is not refunded to you; it lowers the figure your tax is calculated on, so the real saving is your tax rate multiplied by the expense. Because profit also drives other charges, such as UK Class 4 National Insurance or US self-employment tax, the saving is often a little more than income tax alone.

That is why expenses matter so much for anyone self-employed: every genuine cost you fail to record is profit you pay tax on unnecessarily. It is also why the rules are strict about what qualifies, because the line between a business cost and a personal one is where most mistakes (and most disputes with the tax office) happen. One thing to keep separate: if you are registered for VAT or GST, reclaiming the tax on a purchase is a different mechanism from deducting the cost for income tax, so treat the two questions apart.

The one test: is it for the business?

Across most tax systems, the core test is the same idea in different words. In the UK, a cost must be wholly and exclusively for the business. In the US, it must be ordinary and necessary for the business (common in your trade, and helpful to it). Other countries use similar language. Either way, the question is simple: did this cost exist because of the business?

If the answer is a clean yes, it is usually claimable. If the cost is partly personal, you can often claim the business proportion (see below), but not the personal part. Strictly, a cost with both a business and a personal purpose is only claimable where a genuine business part can be separated out, which is why phone, home and car costs are the accepted apportionment cases. And if it is purely personal, it is not a business expense however much you would like it to be. Keeping that test in mind, rather than a memorised list, is what keeps you on the right side of the line when a cost is unusual.

What you can usually claim (allowable expenses)

The exact categories vary by country, but the following are allowable expenses for most self-employed people, in full when they are purely for the business:

Office and workspace costs: rent, utilities and supplies for a business premises, or the business share of a home office.
Travel: train, bus, taxi and air fares for business trips, plus accommodation and parking (not fines).
Vehicle costs: the business portion of fuel, insurance, servicing and so on, or a flat mileage rate (below).
Software and tools: accounting software, design and project tools, cloud storage, website hosting and domain names bought for the business.
Professional services: accountant and bookkeeping fees, business-specific legal costs, and relevant professional subscriptions.
Insurance: business insurance such as professional indemnity or public liability.
Marketing: advertising, a website, printing and promotional costs.
Phone and internet: the business share of your bills (or the full cost of a line used only for work).
Equipment: larger items like a laptop or camera are usually treated as capital. Many countries let you deduct the full cost in the year of purchase through an allowance (the UK's Annual Investment Allowance, the US Section 179), up to generous limits, so check the current rule. These are capital allowances or elections with their own limits and exclusions (UK cars are excluded from the Annual Investment Allowance; US Section 179 is capped by your taxable income), so they are not simply expenses and are worth running past your accountant.

If you are not sure whether your rate already covers your own overhead versus what you can recharge a client, note that this is a different question from invoicing a client for expenses: here we mean costs you deduct from your own taxable profit, not costs you bill on.

Mixed costs: apportioning home, phone and car

Many real costs are part business, part personal, and you claim only the business share. The usual approach is a fair, consistent split you can justify:

Home office: work out the business proportion by the number of rooms used and the time they are used for work, or use a flat-rate method where one is offered.
Phone and broadband: estimate the percentage of use that is for the business and claim that share of the bill.
Car: claim the business-mileage proportion of your running costs, or use a flat mileage rate per business mile.

The key is that the method is reasonable and you keep enough record to show how you reached it. Tax offices accept apportionment; they object to a round number plucked from the air. Where a simplified flat rate exists (next section), it often saves the arithmetic.

What you usually cannot claim

Some costs feel business-related but are generally disallowed, and getting these wrong is a common trigger for questions:

Personal spending of any kind, and the personal share of a mixed cost.
Everyday clothing, even if you only wear it for work (specialist protective gear or a genuine uniform can differ).
Commuting between home and a regular workplace, as opposed to travel to temporary or client sites.
Client entertaining is disallowed in some countries (the UK) and restricted in others (in the US, entertainment is generally not deductible and business meals often only partly), so check the current local rule.
Fines and penalties, including parking and tax penalties.
Your own pay and income tax: money you draw from the business for yourself, and your income-tax or self-employment-tax payments, are not business expenses, which is a very common confusion.

Food is a grey area that varies by country and situation, so do not assume lunch is claimable just because you were working. When a cost sits near the line, that is exactly the moment to ask your accountant rather than guess.

Simplified and flat-rate options

Several countries offer simplified methods so you do not have to total every receipt. The UK has flat-rate simplified expenses for working from home, business mileage and living on your business premises. The US offers a simplified home-office deduction and a standard mileage rate. These trade a little accuracy for a lot less admin, and you can usually compare the flat rate against the actual cost and use whichever is better, though you often have to stick with one method for the year.

Whether a flat rate beats claiming the real cost depends on your situation, so it is worth checking both once. The rates themselves change each year, so always use the current figure from your tax authority rather than one you remember.

Keep the records (the part people skip)

Here is the rule that undoes more claims than any other: you can only claim what you can evidence. A cost you genuinely incurred but cannot prove is a cost you may lose if asked. So the habit matters as much as the knowledge: keep every receipt and invoice, note the business reason where it is not obvious, and keep income and expenses separate from your personal spending, ideally in a dedicated account. Most tax offices require you to keep records for several years (the UK wants them for about five years after the 31 January filing deadline for that tax year, the US generally three years, longer if you substantially under-report income or for property records), so do not throw them away early.

This is where your invoicing fits in. Clean records of what you earned sit on one side and your expenses on the other, and the two together are your taxable profit. With Remit you can issue invoices and keep a statement of account of what each client owes, so the income side is tidy and easy to reconcile at tax time; pair that with a simple folder or app for receipts and your expenses are ready to claim. Our guide on how much to set aside for tax covers what to do with the profit once expenses are deducted.

The bottom line

Claim every genuine cost of running the business, split mixed costs by a fair and recorded proportion, leave out the personal and disallowed ones, and keep the receipts to prove it. Done consistently, expenses are not a loophole; they are simply paying tax on your real profit rather than your turnover. The specifics, from what counts to how long to keep records, differ by country: the UK's guidance is on gov.uk and the US rules in the IRS business-expenses guidance, and many other countries, including Botswana (BURS) and South Africa (SARS), apply a similar principle but with their own rules tied to registration, so check the local authority.

This article is general business information, not tax advice, and the rules and figures change. Confirm what you can claim, and how, with your accountant or revenue authority before relying on it.