HMRC Tightens Rules on Self-Employed Expenses

Why Expense Claims Are Under the Spotlight

I remember the first time I tried to sort my taxes as a newly self-employed contractor. My desk was buried under receipts and spreadsheets, and my nerves were frayed by the fear of getting something wrong. Today, that anxiety is shared by over 12 million UK self-assessment taxpayers, as HMRC launches a new campaign to curb non-compliant expense claims.

This is more than a bureaucratic shuffle. HMRC has used digital campaigns and artificial intelligence to identify errors and close the tax gap, bringing in an extra £27 million in revenue during recent trials. The message is clear: compliance is non-negotiable, and the government is widening its net.

Seb Maley, CEO of tax insurance provider Qdos, warns: "With this latest news, the 12 million people in the UK filing self-assessment tax returns need to take note: the government is casting its net wider and stepping up its compliance efforts." HMRC is not just dissuading dodgy claims—they are actively clamping down on personal expenses filed in a non-compliant way.

What You’ll Need

• Detailed records of all business expenses (receipts, logs, invoices)
• Understanding of HMRC’s latest rules
• Consistent methodology for calculating expense percentages
• Reliable software or spreadsheets for tracking
• Access to official HMRC guidance links (provided below)

Step-by-Step: What Can Contractors Claim?

The golden rule: for an expense to be tax-deductible, it must be incurred wholly and exclusively for business purposes. But life is rarely that clear-cut. If only a portion of an expense is for business, you may claim that part—just be ready to defend it with documentation.

Let’s break down the most common expense categories:

Expense Type	Can You Claim?	Special Notes	HMRC Guidance Link
Vehicle Expenses	Partially	No claims for commuting; claim only for business travel	[BIM37600](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37600)
Travel & Subsistence	Yes (with limits)	No daily meals; claim when traveling for business only	[BIM47705](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47705)
Home Working	Partially	Claim a proportion of household costs based on usage	[BIM47800](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47800)
Training	Sometimes	Only updates to existing skills, not new qualifications	[BIM42526](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim42526)
Entertaining	No	Client entertainment is not tax-deductible	[BIM45000](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45000)

Real-Life Example: Home Office Headaches

When I first set up my home office, I thought I could claim half my rent. Not so fast! HMRC expects you to use a reasonable method—usually the percentage of your home used for business, or the number of rooms. If you work at your kitchen table, only the proportion of time the space is used for business counts. Consistency here is vital.

Simplified Expenses: An Easier Route

If tracking every penny feels overwhelming, HMRC allows the use of simplified (flat rate) expenses for certain costs, including vehicle use and working from home. This reduces paperwork but may not always maximise your claim. [Find out more here](https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim75000).

Troubleshooting Common Mistakes

• Claiming Personal Expenses: Submitting receipts for groceries, family holidays, or daily commutes is a red flag. Only business-related costs apply.
• Dual Purpose Dilemmas: If an expense has both business and personal elements (like a mobile phone), you must split it fairly. Document your calculation method and stick to it year after year.
• Inconsistent Methods: Changing how you calculate expense proportions from one year to the next may trigger questions. Choose a reasonable system and stick with it.
• Missing Documentation: No receipts or mileage logs? That claim could be denied.

Tip: When in doubt, err on the side of caution or consult a qualified accountant.

What’s Next? Protect Yourself

• Review your latest expense claims before filing
• Organise receipts and digital records for at least five years
• Regularly check HMRC’s manual for updates
• If you’re unsure about a claim, seek professional advice

Quick Reference Table

Do Claim	Don’t Claim
Office supplies	Personal clothing
Business insurance	Daily commuting costs
Professional subscriptions	Client entertainment
Marketing and advertising	Family holidays
Bank fees on business accounts	Groceries for home

Share Knowledge, Stay Safe

The rules are evolving, and so must we. By staying informed and diligent, you not only protect your business from costly mistakes but help strengthen the freelance community. If you found this guide helpful, share it with your network—together, we can keep the playing field fair.

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Further Reading:

• [HMRC Expenses Guidance](https://www.gov.uk/expenses-if-youre-self-employed)
• [Business Income Manual](https://www.gov.uk/hmrc-internal-manuals/business-income-manual)

Stay compliant. Stay confident. Your business depends on it.