Expense Basics for Tax
Expenses are important, as they reduce your tax bill
The law around claiming expenses for the Self Employed is that the expense must be “Wholly and Exclusively” for business.
- Confusingly something that is both private and business can be apportioned to make it “Wholly and Exclusively”,
- Some things cannot be apportioned and are disallowed – alas its on a case by case basis and the rules are quite fragmented. There is no one definitive list of deducible and non deductible items in statute.
For employed teachers (on PAYE) the expense must be “Wholly, Exclusively and Necessarily” – this means that very few, if any, expenses can be claimed as HMRC argue that if an expense was “Necessary” the Employer would pay it. Of course many on PAYE will also have some Self Employment as well, so expenses can probably be set off there.
For Sole Traders under the rules for HMRC Trading Allowance you can claim the greater of £1,000 or the actual expenses you incur – which is useful if your expenses are not otherwise that high.
Expenses Checklist
Here is a non exhaustive list of possible expenses to claim:
- Venues
- Refreshments during courses / workshops
- Course materials
- Advertising
- IT and internet
- Phone
- Mobile phone
- Use of home for business – see our separate guide
- Travel but there are special rules for regular journeys – see our separate guide
- Car costs – see our separate guide
- Props and consumables
- Insurances
- Performing Rights if you are using music in class
- Journals
- Reference books
- Professional memberships
- CPD – including related travel and accommodation – see our separate guide
- Mentoring
- Attending classes with senior teachers
- Stationery
- Printing (eg business cards)
- Web design and hosting
- Professional Supervision
- Clothing – see our separate guide
- Massage, Osteopathy or Chiropractic expenses or similar – see our separate guide
- Equipment – see our separate guide
- Employing assistance – but see Employment Status
Travel expenses, including car costs, represent a special case with habitual journeys not claimable regardless of whether they are done by car or public transport. What does and doesn’t count as deductible travel cost?
- Travelling to studios or venues where you are employed under PAYE cannot be expensed
- Travelling to one studio or venue which you rent or own for all or most of your classes cannot be expensed
- Travelling to a number of different studios or venues for teaching can be expensed
- Travelling to see private clients at home can be expensed
- Miscellaneous trips, eg to the bank, or a supplier, can be expensed
- See Eligibility of Travel Expenses for more detail on these rules
There are special rules for:
- Travel Expenses – own car or public transport – regarding whats eligible for deduction
- Car costs
- Equipment
- Training and CPD
- Clothing
- Massage, Osteopathic and Chiropractic expenses
- Working from Home and Home as Office Expenses
Expenses that generally can’t be claimed against tax:
- Medical, health and accident insurance
- Medical and surgical costs, even if its to enable you to return to work earlier
- Initial costs of training as a yoga teacher
- Holidays, even if its a yoga holiday (a retreat which is teaching based would be deductible)
