MTD expense categories explained

Find the category, check what goes there and what does not, then record the cost on that line. If something fits no category, use Other Expenses. If HMRC’s notes say a cost is not allowable, do not claim it.

Each category shows the name in the spreadsheet template, the HMRC field it is sent in and the tax return box it matches. Some costs need a different line depending on your accounting basis. HMRC’s notes say when.

Everything your business received for sales, fees and work done, before expenses and CIS deductions.

Spreadsheet line: Total Sales. HMRC field: turnover. Tax return: SA103F box 15, Your turnover.

Example: £450 paid by bank transfer for a job you finished.

Goes here

• Payments by cash, card, cheque or any other method
• Tips, fees and commissions
• Payments in kind for work done or goods sold
• Money owed to you for work already done, if you use traditional accounting
• The full amount before CIS deductions, if you are a subcontractor

Does not go here

• Business income that is not sales, which goes on Other Income
• Income from another trade or business, which is a separate business

HMRC Self-employment (full) notes, box 15

Trading income that is not sales, such as letting part of your business premises.

Spreadsheet line: Other Income. HMRC field: other. Tax return: SA103F box 16, Any other business income.

Example: £200 for letting a desk in your workshop.

Goes here

• Income from letting part of your business accommodation
• Payments for the right to cross your land
• Other income that is part of your trade but not your turnover

Does not go here

• Sales, fees and work done, which go on Total Sales
• Income from another trade or business, which is a separate business

HMRC Self-employment (full) notes, box 16

Stock, raw materials and the direct costs of producing the goods you sell.

Spreadsheet line: Cost of Goods. HMRC field: costOfGoods. Tax return: SA103F box 17, Cost of goods bought for resale or goods used.

Example: £120 of timber for furniture you make and sell.

Goes here

• Goods bought for resale (stock)
• Raw materials
• Direct costs of producing goods sold
• Commissions and discounts
• Fuel, if you are a taxi or minicab driver or in the road haulage industry

Does not go here

• Goods or materials bought for private use
• Depreciation of equipment, which goes on Depreciation

HMRC Self-employment (full) notes, box 17 · GOV.UK: Reselling goods

Payments to subcontractors or any person or company for construction work.

Spreadsheet line: Subcontractors. HMRC field: paymentsToSubcontractors. Tax return: SA103F box 18, Construction industry.

Example: £900 paid to a plasterer for work on a customer’s extension.

Goes here

• Payments to subcontractors for any type of construction work
• Payments to any person or company for construction work for your business

Does not go here

• Payments for non-business work
• Subcontract labour that is not construction work, which goes on Staff Wages

HMRC Self-employment (full) notes, box 18 · GOV.UK: Staff expenses

Wages, salaries and other costs of employing staff. Not payments to yourself.

Spreadsheet line: Staff Wages. HMRC field: wagesAndStaffCosts. Tax return: SA103F box 19, Wages, salaries and other staff costs.

Example: £1,200 monthly wages for a part-time assistant.

Goes here

• Salaries, wages and bonuses
• Pensions and benefits for employees
• Agency fees
• Subcontract labour costs not included elsewhere
• Employer’s National Insurance

Does not go here

• Payments to yourself, your own pension payments or your own National Insurance
• Carers or domestic help, such as nannies
• Employment costs not paid within 9 months of the end of the accounting period

HMRC Self-employment (full) notes, box 19 · GOV.UK: Staff expenses

Running costs of business vehicles and business travel, such as fuel, parking and fares.

Spreadsheet line: Car / Van / Travel. HMRC field: carVanTravelExpenses. Tax return: SA103F box 20, Car, van and travel expenses.

Example: £18 train fare to visit a customer.

Goes here

• Vehicle insurance, repairs, servicing and fuel
• Parking, hire charges, vehicle tax and breakdown cover
• Train, bus, tram, air and taxi fares
• Hotel rooms and meals on overnight business trips
• A flat rate per mile instead, if you use simplified expenses

Does not go here

• Non-business driving or travel
• Travel between home and work
• Fines or penalty charges
• Buying a car. Claim capital allowances instead, unless you use simplified mileage expenses, which already cover the car

HMRC Self-employment (full) notes, box 20 · GOV.UK: Car, van and travel expenses

Rent, rates, power, insurance and security for business premises, and the business part of your home.

Spreadsheet line: Premises Costs. HMRC field: premisesRunningCosts. Tax return: SA103F box 21, Rent, rates, power and insurance costs.

Example: £650 monthly rent for your workshop.

Goes here

• Rent for business premises
• Business and water rates
• Light, heat, power and other utility bills
• Property insurance and security
• The business part of using your home as an office

Does not go here

• Any non-business part, or private use of business premises
• The cost of buying business premises

HMRC Self-employment (full) notes, box 21 · GOV.UK: Office, property and equipment

Repairs and maintenance of business premises and equipment.

Spreadsheet line: Maintenance. HMRC field: maintenanceCosts. Tax return: SA103F box 22, Repairs and maintenance of property and equipment.

Example: £95 to repair the lock on your shop door.

Goes here

• Repairs to business premises
• Repairs and maintenance of business equipment

Does not go here

• Repairs, improvements or alterations to non-business parts of premises or equipment
• Alterations to install or replace equipment if you use traditional accounting, which are capital allowances

HMRC Self-employment (full) notes, box 22 · GOV.UK: Office, property and equipment

Phone and internet bills, postage, stationery, printing, small office equipment and software.

Spreadsheet line: Admin. HMRC field: adminCosts. Tax return: SA103F box 23, Phone, fax, stationery and other office costs.

Example: £25 for printer ink.

Goes here

• Phone, mobile, fax and internet bills
• Postage, stationery and printing
• Printer ink and cartridges
• Small office equipment
• Software used for less than 2 years, or with a licence you pay to renew regularly

Does not go here

• The private or non-business part of phone, internet or other office costs
• Equipment you keep, such as a computer, if you use traditional accounting, which is capital allowances

HMRC Self-employment (full) notes, box 23 · GOV.UK: Office, property and equipment

Entertaining clients, suppliers or customers. Recorded, but not claimed as an expense.

Spreadsheet line: Business Entertainment. HMRC field: businessEntertainmentCosts. Tax return: SA103F box 24, with the same amount in box 39 as disallowable.

Example: £80 lunch with a customer.

Goes here

• Meals, drinks or hospitality for clients, suppliers or customers
• Hospitality at events, such as entertainers, or food or accommodation for guests

Does not go here

• Advertising and marketing, which go on Advertising
• Your own meals on overnight business trips, which go on Car, Van & Travel

HMRC Self-employment (full) notes, box 24 · GOV.UK: Marketing and entertainment

Advertising and marketing, such as directory adverts, mailshots, free samples and website costs.

Spreadsheet line: Advertising. HMRC field: advertisingCosts. Tax return: SA103F box 24, Advertising and business entertainment costs.

Example: £60 for a listing in a local trade directory.

Goes here

• Advertising in newspapers or directories
• Mailshots
• Free samples of things you sell
• Website costs
• Promotional items with your business name or logo, up to £50 per person each tax year

Does not go here

• Entertaining clients, suppliers or customers, which goes on Business Entertainment
• Food, drink or tobacco you give away

HMRC Self-employment (full) notes, box 24 · GOV.UK: Marketing and entertainment

Interest on business loans and hire purchase charges. Not the repayments.

Spreadsheet line: Interest Paid. HMRC field: interestOnBankOtherLoans. Tax return: SA103F box 25, Interest on bank and other loans.

Example: £40 monthly interest on a business loan.

Goes here

• Interest on bank and other business loans
• Fees for buying goods and hire purchase

Does not go here

• Repayments of the amount borrowed
• The non-business part of a loan or finance payment

HMRC Self-employment (full) notes, box 25 · GOV.UK: Legal and financial costs

Bank, overdraft and credit card charges, and hire purchase and lease interest.

Spreadsheet line: Finance Charges. HMRC field: financeCharges. Tax return: SA103F box 26, Bank, credit card and other financial charges.

Example: £8 monthly fee for your business bank account.

Goes here

• Bank, overdraft and credit card charges
• Hire purchase and lease interest
• Alternative finance payments, such as Islamic finance

Does not go here

• Capital repayments of loans, overdrafts or finance arrangements
• The non-business part of an account, loan or finance payment

HMRC Self-employment (full) notes, box 26 · GOV.UK: Legal and financial costs

Sales you included in your turnover but will never receive. Traditional accounting only.

Spreadsheet line: Bad Debts. HMRC field: irrecoverableDebts. Tax return: SA103F box 27, Irrecoverable debts written off.

Example: £300 invoice written off after the customer stopped trading.

Goes here

• Amounts in your turnover that are unpaid and written off, if you use traditional accounting

Does not go here

• Any bad debt if you use cash basis, because unpaid sales were never in your income
• Debts not included in turnover
• Debts relating to fixed assets, such as land, buildings or machinery
• General or estimated bad debts, such as 5% of turnover

HMRC Self-employment (full) notes, box 27 · GOV.UK: Legal and financial costs

Accountants, solicitors, surveyors, architects and professional indemnity insurance.

Spreadsheet line: Professional Fees. HMRC field: professionalFees. Tax return: SA103F box 28, Accountancy, legal and other professional fees.

Example: £150 to a solicitor to check a customer contract.

Goes here

• Fees for accountants, solicitors, surveyors and architects, for business reasons
• Professional indemnity insurance premiums

Does not go here

• Legal costs of buying property or large items of equipment
• Costs of settling tax disputes
• Fines for breaking the law
• The cost of preparing and submitting your Self Assessment tax return

HMRC Self-employment (full) notes, box 28 · GOV.UK: Legal and financial costs

Not claimed as an expense. Claim the cost of the item instead. How depends on your accounting basis.

Spreadsheet line: Depreciation. HMRC field: depreciation. Tax return: SA103F box 29, with the same amount in box 44 as disallowable.

Example: £400 depreciation on a laptop in your accounts.

Goes here

• Depreciation of equipment or cars in your accounts
• Losses on the sale of assets

Does not go here

• The cost of equipment you buy. Under cash basis most equipment is an expense when you pay for it. Under traditional accounting claim capital allowances. So do cars, unless you use simplified mileage expenses, which already cover the car

HMRC Self-employment (full) notes, box 29 · GOV.UK: Office, property and equipment

Allowable costs that fit no other line, such as trade subscriptions and protective clothing.

Spreadsheet line: Other Expenses. HMRC field: otherExpenses. Tax return: SA103F box 30, Other business expenses.

Example: £45 yearly subscription to a trade journal.

Goes here

• Trade or professional journals and subscriptions
• Protective clothing, uniforms and costumes you need for your work
• Other sundry running costs
• Net VAT payments

Does not go here

• Payments to clubs, charities or political parties
• Ordinary clothing, even if you wear it for work
• Any non-business part of an expense

HMRC Self-employment (full) notes, box 30 · GOV.UK: Clothing expenses · GOV.UK: Subscriptions

Your allowable expenses added up. Leave out Business Entertainment and Depreciation.

Spreadsheet line: Total Expenses. HMRC field: consolidatedExpenses. Tax return: SA103F box 31, Total expenses.

Example: £4,250 of allowable costs so far this tax year.

Goes here

• All your allowable expenses for the tax year so far, as one figure, on Simple

Does not go here

• Business Entertainment and Depreciation, which are not claimed
• Your own wages or drawings

HMRC Self-employment (full) notes, box 31

Tax deducted from your trading income before you were paid. CIS deductions are entered separately.

Spreadsheet line: Tax Taken Off Trading Income. HMRC field: taxTakenOffTradingIncome. Tax return: SA103F box 82, Other tax taken off trading income.

Example: £45 of tax deducted from a payment for your work.

Goes here

• Any other tax taken off your trading income

Does not go here

• CIS deductions, which are entered separately

HMRC Self-employment (full) notes, box 82

All rent and other income from letting property, before expenses.

Spreadsheet line: Rent Income. HMRC field: periodAmount. Tax return: SA105 box 20, Total rents and other income from property.

Example: £950 monthly rent from a tenant.

Goes here

• Rent from a tenancy
• Leasing or licensing agreements over your land or property
• Furnished, unfurnished, commercial and domestic lettings, including amounts for the use of furniture
• Rent charges and ground rents
• Money you receive from your own insurance against loss of rent

Does not go here

• Running a guest house or bed and breakfast, which is a trade
• Rent paid in advance for the next tax year, if you use traditional accounting

HMRC UK property notes, box 20 · GOV.UK: Rental income

Rent for a property you let, rates, Council Tax, insurance, ground rents and bills you pay.

Spreadsheet line: Premises Costs. HMRC field: premisesRunningCosts. Tax return: SA105 box 24, Rent, rates, insurance and ground rents.

Example: £320 yearly landlord buildings insurance.

Goes here

• The rent for a lease of a property you let
• Business rates, water rates and Council Tax
• Gas and electricity you pay for
• Property and contents insurance, and insurance against loss of rent
• Ground rents

Does not go here

• Money you receive from your own insurance claim, which goes in Rent Income
• Costs that are not for your letting

HMRC UK property notes, box 24 · GOV.UK: Allowable expenses when you let property

Repairs and maintenance that keep the property as it was. Not improvements.

Spreadsheet line: Repairs and Maintenance. HMRC field: repairsAndMaintenance. Tax return: SA105 box 25, Property repairs and maintenance.

Example: £180 to repair a leaking roof.

Goes here

• Exterior and interior painting
• Damp treatment, stone cleaning or roof repairs
• Furniture repairs
• Repairs to machinery supplied with the property

Does not go here

• Improvements or enhancements to the property, which are capital expenditure

HMRC UK property notes, box 25 · GOV.UK: Allowable expenses when you let property

Loan costs and interest for a non-residential property you let. Residential lets use Residential Finance Costs.

Spreadsheet line: Finance Costs. HMRC field: financialCosts. Tax return: SA105 box 26, Non-residential property finance costs.

Example: £410 monthly interest on a loan for a shop you let.

Goes here

• Costs of getting a loan or alternative finance to buy a non-residential property you let
• Interest on that loan, and alternative finance payments

Does not go here

• Loan costs and interest for a residential let, which go on Residential Finance Costs
• Capital repayments of the loan

HMRC UK property notes, box 26 · GOV.UK: Allowable expenses when you let property

Letting agent and management fees, accountants, and legal fees for renewing short leases.

Spreadsheet line: Professional Fees. HMRC field: professionalFees. Tax return: SA105 box 27, Legal, management and other professional fees.

Example: £95 monthly letting agent management fee.

Goes here

• Management fees paid to an agent for rent collection, advertising and administration
• Accountant’s fees
• Legal and professional fees for renewing a lease of less than 50 years
• Professional fees to evict a tenant so you can let the property again
• Costs of appealing against a compulsory purchase order

Does not go here

• Costs of the first letting or subletting of a property for more than a year
• Costs of agreeing and paying a premium on renewal of a lease
• Fees for planning permission, or for registering title when you buy a property

HMRC UK property notes, box 27 · GOV.UK: Allowable expenses when you let property

Services you provide to tenants, such as cleaning, gardening or communal hot water, including wages.

Spreadsheet line: Cost of Services. HMRC field: costOfServices. Tax return: SA105 box 28, Costs of services provided, including wages.

Example: £60 monthly for a cleaner for the shared hallway.

Goes here

• Services you provide to tenants, such as communal hot water, gardening or cleaning
• Wages of gardeners and cleaners

Does not go here

• Money tenants pay you for those services, which goes in Rent Income

HMRC UK property notes, box 28 · GOV.UK: Allowable expenses when you let property

Travel for your letting business, including the letting share of vehicle running costs.

Spreadsheet line: Travel Costs. HMRC field: travelCosts. Tax return: SA105 box 29, as business travel.

Example: £12 of fuel to inspect a flat you let.

Goes here

• Vehicle running costs, only the part used for your rental business
• Mileage rate deductions for business motoring
• Other business travel for your letting

Does not go here

• Travel that is not for your rental business

HMRC UK property notes, box 29 · GOV.UK: Allowable expenses when you let property

Other allowable letting costs, such as phone calls, stationery and advertising for new tenants.

Spreadsheet line: Other Expenses. HMRC field: other. Tax return: SA105 box 29, Other allowable property expenses.

Example: £30 to advertise a flat on a lettings website.

Goes here

• Stationery, phone calls and other direct costs of your letting
• Advertising for new tenants
• Part of a premium paid to a landlord for a lease, if you are subletting
• Irrecoverable debts written off, if you do not use cash basis

Does not go here

• Private phone calls
• Clothing, even for meetings about your letting
• Personal expenses that are not solely for your letting

HMRC UK property notes, box 29 · GOV.UK: Allowable expenses when you let property

Mortgage interest and loan costs for a residential let. Used for a tax reduction, not as an expense.

Spreadsheet line: Residential Finance Costs. HMRC field: residentialFinancialCost. Tax return: SA105 box 44, Residential property finance costs.

Example: £520 monthly mortgage interest on a buy-to-let flat.

Goes here

• Interest on a mortgage or loan to buy a residential property you let
• Costs of getting that loan, and alternative finance payments

Does not go here

• The capital part of your mortgage payments
• Finance costs for a non-residential property, which go on Finance Costs

HMRC UK property notes, box 44 · GOV.UK: Tax relief for residential landlords

Your property expenses added up. Leave out Residential Finance Costs.

Spreadsheet line: Total Expenses. HMRC field: consolidatedExpenses. Tax return: SA105 box 29, all expenses as one figure.

Example: £2,400 of letting costs so far this tax year.

Goes here

• All your allowable property expenses for the tax year so far, as one figure, on Simple

Does not go here

• Residential Finance Costs, which are entered separately

HMRC UK property notes, box 29

• Record each cost on the line HMRC’s notes describe
• Leave out the private part of any cost
• Use Residential Finance Costs, not Finance Costs, for residential mortgage interest
• Leave Business Entertainment and Depreciation out of Total Expenses
• £30.00 + VAT a year or £3.50 + VAT a month. Bookkeeping is free. Pay when you send to HMRC.

Tax rules can change and individual circumstances matter. Use HMRC’s current guidance to confirm the treatment that applies to you.