This guide debunks the confusion of what side hustle allowable expenses to claim on a self assessment tax return when self employed.
So you have started your side hustle and are absolutely killing it. You have a never ending flow of customers that loves your products or services, but amidst the frenetic hustle and bustle of your self employed side hustle journey you realise your expenses are gradually going through the roof.
fear not though as these expenses can shrink your tax bill and give your side hustle a much needed boost.
What are side hustle allowable expenses?
If you have your own self employed side hustle, one of you’re responsibilities is to prepare and file a self assessment tax return each tax year.
When you start your hustle, as well as during the running of your business you will have things to products or services (allowable expenses) you need to purchase to support the running of your gig.
The good news is that these allowable expenses are costs that can be deducted from your taxable income, which will help to lower the amount of tax you pay.
For example, lets say you sell products online and have an annual turnover of £34,000 but claim £5000 in expenses which could be postage or packaging. £34,000 – £5000 means you will be taxed on £29,000 rather than the £34,000 .
WARNING: Tax can be complicated and the rules can change each year. Therefore it is always a good idea to speak to an accountant.
Why do i need to claim my side hustle allowable expenses?
Claiming the right type of expenses on your side hustle self assessment tax return will ensure you don’t get into trouble with HMRC, you pay the correct amount of tax, but also help to grow and develop your business.
That is because you can claim expenses such as marketing costs to spread the word about your business on google. You can also develop your skills and knowledge to grow your business by claiming expenses such as professional development courses and training.
Both these things can help to make your business grow, thrive and ultimately be the success you want it to be.
It is also worth pointing out that you can only claim expenses if you are self employed. You cannot claim expenses if you are employed for instance. You may also want to check if you have 2 jobs do you pay more tax because a lot of people nowadays can be both self employed and be employed by an employer at the same time.
Side hustle allowable expenses to claim
Expenses you can claim on your self assessment tax return can be divided into various groups:
Professional development and training expenses
home office
staff expenses
office supplies and equipment
travel and transport
professional services
marketing, advertising and branding
However, it’s really important that you understand what expenses you can and cannot claim for. This will ensure you are as tax efficient as possible and don’t get into trouble with HMRC. It is advisable to get help from an accountant.
Professional development and training expenses to claim
If your a freelance photographer and you want to take a course on new photographic techniques, this would be an allowable expense you can claim on you tax return.
Another example of professional development and traning expenses you can claim might be a business training course for start ups. Starting a business can be quite daunting, but having some business training can help to kickstart you new venture.
If your side hustle is working for Deliveroo and you deliver food on a scooter or motorcycle you have to complete your Compulsary Basic Training (CBT) every two year to ride on the UK roads. The cost of this course is another example of an allowable expense.
Side Hustle home office expenses to claim
Council Tax bills
Heating and Electricity bills
monthy Internet and phone bills
Mortgage interest or rent
If you have a self employed side hustle where you have to work from home, the good news is that you claim expenses for on things like your heating and electricity.
Typically this would apply to someone that might have a website design business and have a home office, or a bookkeeper for instance, however a word of caution, you cant claim the entirety of you bills so it is advised that you speak to an accountant for guidance.
Staff expenses to claim
Employee and Staff salaries
Bonuses
Pension contributions
benefits
Agency fees
Employer National Insurance Contributions
When your side gig needs to go to the next level, and you decide to take on staff or additional help, staff costs and salaries are allowable expenses. You can even claim expenses for for things such as agency fees or pension contributions.
Office supplies and equipment you can claim for you side hustle
Business stationary
Printing costs
Office equipment such as chairs and desks
Postage
It has already been mentioned above the allowable expenses you can claim if your side hustle has you working from a home office. But an office wouldn’t be an office without the obligatory stationary, which is another allowable expense you can claim on on your self assessment tax return.
Furnishing your office with the latest adjustable table, pens and paper as well as postage for letters are all things you can claim on your tax return as an expense.
Travel and transport expenses to claim on your tax return
If your self employed side hustle takes you on the road, tracks or air you probably want to know if these costs are classed as allowable expenses you can claim on your tax return?
Below is a list of travel and transport expenses you may be able to claim when you come to prepare you tax return:
meals on overnight business trips
vehicle insurance
breakdown cover
repairs and servicing
fuel
parking
vehicle licence fees
bus tickets
Train Fare
Flight tickets
hotel rooms
hire charges
Its worth noting that HMRC are quite strict on things you cannot claim on your tax return which includes fines such as speeding or parking tickets, non business travel, as well as travel between home and work.
Professional Services expenses to claim
As a side hustler you are probably going to have to hire an accountant to prepare and file your tax return each year. The cost of this you will be pleased to know is also an expense as well as the following:
Surveyor or Architect
Solicitor
Accountant
Professional indemnity insurance
Public Liability Insurance
You can also claim the following:
Credit card charges
Overdraft fees
Hire purchase interest
leasing payments
interest on bank and business loans
Marketing, advertising and branding Allowable expenses
Website cost
Social Media advertising
Radio and TV advertising
advertising in newspapers, directories and publications
Leaflets and flyers
A website is your gateway to a whole world of customers, and if you do not build it, they will not come. So build it you should, and claim it as a side hustle expense on your tax return. Thats because websites and other marketing material such as social media advertising, google ads, leaflets and flyers are all classed as allowable expenses, and can be claimed on your side hustle self employed tax return.
Warning: Understanding which expenses can be claimed on your tax return can be complicated so it is advised to always speak to an accountant.
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This guide debunks the confusion of what side hustle allowable expenses to claim on a self assessment tax return when self employed.
So you have started your side hustle and are absolutely killing it. You have a never ending flow of customers that loves your products or services, but amidst the frenetic hustle and bustle of your self employed side hustle journey you realise your expenses are gradually going through the roof.
fear not though as these expenses can shrink your tax bill and give your side hustle a much needed boost.
What are side hustle allowable expenses?
If you have your own self employed side hustle, one of you’re responsibilities is to prepare and file a self assessment tax return each tax year.
When you start your hustle, as well as during the running of your business you will have things to products or services (allowable expenses) you need to purchase to support the running of your gig.
The good news is that these allowable expenses are costs that can be deducted from your taxable income, which will help to lower the amount of tax you pay.
For example, lets say you sell products online and have an annual turnover of £34,000 but claim £5000 in expenses which could be postage or packaging. £34,000 – £5000 means you will be taxed on £29,000 rather than the £34,000 .
WARNING: Tax can be complicated and the rules can change each year. Therefore it is always a good idea to speak to an accountant.
Why do i need to claim my side hustle allowable expenses?
Claiming the right type of expenses on your side hustle self assessment tax return will ensure you don’t get into trouble with HMRC, you pay the correct amount of tax, but also help to grow and develop your business.
That is because you can claim expenses such as marketing costs to spread the word about your business on google. You can also develop your skills and knowledge to grow your business by claiming expenses such as professional development courses and training.
Both these things can help to make your business grow, thrive and ultimately be the success you want it to be.
It is also worth pointing out that you can only claim expenses if you are self employed. You cannot claim expenses if you are employed for instance. You may also want to check if you have 2 jobs do you pay more tax because a lot of people nowadays can be both self employed and be employed by an employer at the same time.
Side hustle allowable expenses to claim
Expenses you can claim on your self assessment tax return can be divided into various groups:
However, it’s really important that you understand what expenses you can and cannot claim for. This will ensure you are as tax efficient as possible and don’t get into trouble with HMRC. It is advisable to get help from an accountant.
Professional development and training expenses to claim
If your a freelance photographer and you want to take a course on new photographic techniques, this would be an allowable expense you can claim on you tax return.
Another example of professional development and traning expenses you can claim might be a business training course for start ups. Starting a business can be quite daunting, but having some business training can help to kickstart you new venture.
If your side hustle is working for Deliveroo and you deliver food on a scooter or motorcycle you have to complete your Compulsary Basic Training (CBT) every two year to ride on the UK roads. The cost of this course is another example of an allowable expense.
Side Hustle home office expenses to claim
If you have a self employed side hustle where you have to work from home, the good news is that you claim expenses for on things like your heating and electricity.
Typically this would apply to someone that might have a website design business and have a home office, or a bookkeeper for instance, however a word of caution, you cant claim the entirety of you bills so it is advised that you speak to an accountant for guidance.
Staff expenses to claim
When your side gig needs to go to the next level, and you decide to take on staff or additional help, staff costs and salaries are allowable expenses. You can even claim expenses for for things such as agency fees or pension contributions.
Office supplies and equipment you can claim for you side hustle
It has already been mentioned above the allowable expenses you can claim if your side hustle has you working from a home office. But an office wouldn’t be an office without the obligatory stationary, which is another allowable expense you can claim on on your self assessment tax return.
Furnishing your office with the latest adjustable table, pens and paper as well as postage for letters are all things you can claim on your tax return as an expense.
Travel and transport expenses to claim on your tax return
If your self employed side hustle takes you on the road, tracks or air you probably want to know if these costs are classed as allowable expenses you can claim on your tax return?
Below is a list of travel and transport expenses you may be able to claim when you come to prepare you tax return:
Its worth noting that HMRC are quite strict on things you cannot claim on your tax return which includes fines such as speeding or parking tickets, non business travel, as well as travel between home and work.
Professional Services expenses to claim
As a side hustler you are probably going to have to hire an accountant to prepare and file your tax return each year. The cost of this you will be pleased to know is also an expense as well as the following:
You can also claim the following:
Marketing, advertising and branding Allowable expenses
A website is your gateway to a whole world of customers, and if you do not build it, they will not come. So build it you should, and claim it as a side hustle expense on your tax return. Thats because websites and other marketing material such as social media advertising, google ads, leaflets and flyers are all classed as allowable expenses, and can be claimed on your side hustle self employed tax return.
Warning: Understanding which expenses can be claimed on your tax return can be complicated so it is advised to always speak to an accountant.
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