Expenses if you're self-employed

7. Legal and financial costs

Accountancy, legal and other professional fees can count as allowable business expenses.

You can claim costs for:

  • hiring of accountants, solicitors, surveyors and architects for business reasons
  • professional indemnity insurance premiums

You can’t claim for:

  • legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
  • fines for breaking the law

Bank, credit card and other financial charges

You can claim business costs for:

  • bank, overdraft and credit card charges
  • interest on bank and business loans
  • hire purchase interest
  • leasing payments
  • alternative finance payments, eg Islamic finance

If you’re using cash basis accounting you can only claim up to £500 in interest and bank charges.

You can’t claim for repayments of loans, overdrafts or finance arrangements.

Insurance policies

You can claim for any insurance policy for your business, eg public liability insurance.

When your customer doesn’t pay you

If you’re using traditional accounting, you can claim for amounts of money you include in your turnover but won’t ever receive (‘bad debts’). However, you can only write off these debts if you’re sure they won’t be recovered from your customer in the future.

You can’t claim for:

  • debts not included in turnover
  • debts related to the disposal of fixed assets, eg land, buildings, machinery
  • bad debts that aren’t properly calculated, eg you can’t just estimate that your debts are equal to 5% of your turnover

Bad debts can’t be claimed if you use cash basis accounting because you’ve not received the money from your debtors. With cash basis, you only record income on your return that you’ve actually received.