Business expenses when costs have a private element

Self-employed people can deduct allowable business expenses when calculating their taxable profits. However, where a cost has both a business and private element, only the business proportion can normally be claimed.

For example, if a mobile phone bill is £200 for the year, with £70 relating to business calls and £130 to personal use, only the £70 business cost can be claimed.

The same principle can apply to costs such as travel, telephone and internet bills, and other items used for both business and private purposes. Keeping appropriate records can help demonstrate how the business proportion has been calculated.

There are specific rules for people who work from home. A reasonable proportion of costs such as heating, electricity, Council Tax, rent or mortgage interest and internet and telephone use may be allowable.

The calculation should use a reasonable method for dividing the costs between business and private use. This could take account of the number of rooms used for business and the amount of time spent working from home.

Alternatively, eligible self-employed people may be able to use simplified expenses, which provide flat rates for working from home, certain vehicles and living at business premises.

Only the allowable business expenses portion should be included when calculating taxable profits.

Source:HM Revenue & Customs | 07-09-2026

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