February 25, 2026 · 10 min read
When you're self-employed, you pay tax on profit, not revenue. Business expenses reduce your taxable profit, which directly reduces your tax bill. A freelancer with £60,000 in revenue and £8,000 in legitimate expenses pays tax on £52,000 — potentially saving £2,000–£3,000 per year depending on their tax bracket.
The key rule in most jurisdictions: an expense must be 'wholly and exclusively' for business purposes to be deductible. Mixed-use expenses (like a phone used for both work and personal calls) can often be partially claimed.
This is the clearest category. Any software you use exclusively or primarily for work is deductible: design tools, project management apps, accounting software, cloud storage, communication tools, website hosting, domain registration, and stock asset subscriptions.
Keep your receipts. Most software companies send email invoices — create a dedicated folder and file them monthly.
If you work from home, you can claim a portion of your rent/mortgage, utilities, and internet as a business expense. The proportion is typically calculated by dividing the area used exclusively for work by the total home area.
In the UK, HMRC also allows a simplified flat rate (£6/week in 2026). In the US, the home office deduction requires the space to be used 'regularly and exclusively' for business.
Computers, monitors, keyboards, cameras, microphones, lighting, external drives, and other equipment used for work are deductible. Depending on your country's tax rules, you may claim the full cost in the year of purchase (expensing) or depreciate it over several years.
Courses, books, tutorials, certifications, and conference tickets that relate to your existing freelance work are deductible. Note: education that qualifies you for a new career is generally not deductible — it must be relevant to your current business.
Professional indemnity insurance, public liability insurance, and business insurance premiums are fully deductible. So are accountant fees, legal fees for business contracts, and professional membership dues.
Travel to client sites, co-working spaces, or business meetings is deductible — but commuting to a regular place of work is not. Keep a log of business journeys including date, destination, purpose, and distance. Meals at client meetings are often partially deductible (50% in the US; specific rules vary by country).
The simplest system: a dedicated business bank account and credit card for all business purchases. Every transaction is then automatically logged. Export the statements quarterly and categorise them. Use accounting software or a spreadsheet — the format matters less than the consistency.
Our Tax Estimator helps you see the impact of your expenses on your overall tax liability before you file.
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