Private practice expenses
You must always keep a record of your business expenses. This is because they can be offset against your revenue, which will reduce the amount that is liable for tax and will save you money.
You must ensure that any expenses you claim are completely ’allowable’. HMRC states that a business expense is allowable if it:
- isn’t capital expenditure (see below)
- isn’t specifically non-allowable (for example entertaining clients)
- is wholly and exclusively for business purposes
The most common expenses that are normally allowable include:
- cost of stock
- payroll costs
- premises costs
- motor and travel expenses
- finance costs
- administration costs
- professional fees
Tip: Good accounting software or private practice management software can help you keep track of your expenditure. An HMRC investigation, while unlikely, can happen, and you should always ensure you are confident in the accuracy of your accounts.
The following guide is NOT intended to replace the advice of a qualified accountant. We always recommend that you check what you can claim with an accountant or on the HMRC website.
What can I claim for my private practice?
If you’re self-employed, you can claim the following:
- Business mileage. Calculate the mileage for every journey you make for business purposes. That’s a journey to visit a client or to a professional event. It does NOT include journeys to and from your own permanent office or any place of employment. You can claim a set amount per mile (currently 45p for the first 10,000 miles in a tax year) or actual expenditure on business mileage - this is intended to cover not only the fuel cost but also the running costs of your vehicle: visit the HMRC website for further information.
- Professional fees and subscriptions. You can claim the cost of any professional fees or subscriptions that are related to your work.
- Office or consulting room expenses, such as utilities, rates, and insurance.
- Expenses when working from home. You can claim a proportion of running costs such as electricity, broadband, phone and so on. You must base the amount you claim on the estimated proportion of your home that you use for work.
- Stationery and postage costs.
- Books and journals that are directly related to your private practice and your area of expertise.
- Accountancy fees, solicitor’s fees and other fees related to your business.
- The cost of training if it relates to your work and is an existing skill - but NOT if it is for an entirely new skill.
- Marketing costs such as website hosting and advertising.
- Entertainment and gifts are generally NOT allowable.
Office furniture, computers and other equipment that you buy for your private practice is known as capital expenditure. These can be claimed as capital allowances on your tax return - they are slightly different to business expenditure but will still reduce the amount that is liable to tax.
How far back can I claim?
You can claim your business expenses for the current tax years. So, if you incur any expenses in the years running up to setting up your private practice, keep a record of them.
Don’t claim if you can’t prove it!
You MUST keep your receipts. A receipt can be a physical document, or an official online confirmation. You should also record all your expenses in a purchases ledger, on a regular basis.
Personal receipts – a warning
It is always a good idea to keep a record of personal receipts, especially if you use the same bank accounts for personal and business transactions. If HMRC should ever investigate your expenditure, you will be able to give them the information they need.