4. Permitted expenses from self-employment

Chris Lewis

To work out your gross profits from self-employment, you can deduct any expenses that have been ‘wholly and exclusively incurred’ for the purpose of the business during the monthly assessment period, including:

■regular costs such as rent or wages;

■stock purchase;

■utilities, phone and travel costs (but see below );

■the purchase or hire of equipment and tools; and

■VAT.
, para H4202

Where expenses have been run up for more than one purpose (eg they have also been used for personal reasons), if it is possible to identify a specific amount that was used only for your business, then that amount can be deducted.

No deduction can be made for the following:

■expenditure on non-depreciating assets (including property, shares and investments);

■payments to cover capital on a loan used for the business;

■expenses for business entertainment; and

■any expenses that have been unreasonably run up (ie they are considered inap

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