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Business expenses when costs have a private element

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Income Tax

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10 September 2026

Self-employed people can only claim the business share of mixed costs. This guide explains business expenses when costs have a private element, covering phone bills, travel, working from home and simplified expenses, plus the records you should keep.

Business expenses when costs have a private element

Self-employed people can deduct allowable business expenses when working out their taxable profits. However, many costs are not purely business related. Where a cost has both a business and a private element, you can normally only claim the business proportion.

For example, a mobile phone bill might total £200 for the year. If £70 relates to business calls and £130 to personal use, only the £70 is allowable. Therefore, the private share must be excluded from your figures.

Costs that often have a mixed use

The same principle applies widely. In practice, you should review costs such as:

travel and motoring expenses
telephone and mobile bills
broadband and internet charges
other equipment or items used for both business and private purposes

Consequently, keeping clear and accurate records matters. Good records help you show how you calculated the business proportion, especially if HMRC asks questions later.

Working from home

Specific rules apply to people who work from home. As a result, a reasonable proportion of certain household costs may be allowable. These can include:

heating and electricity
Council Tax
rent or mortgage interest
internet and telephone use

You should divide these costs using a reasonable and consistent method. For instance, you might consider the number of rooms used for business. Additionally, you can take account of the time you spend working at home each week.

Simplified expenses

Alternatively, eligible self-employed people may prefer simplified expenses. This approach uses flat rates instead of detailed calculations. Flat rates currently cover working from home, certain vehicles, and living at business premises. You can find further guidance at https://www.gov.uk/simpler-income-tax-simplified-expenses.

Ultimately, only the allowable business portion should appear in your taxable profits. Understanding business expenses when costs have a private element helps you claim correctly and avoid errors.