What can a freelancer claim as a business expense?

Costs incurred for the business rather than for yourself. Software, equipment, professional insurance, an accountant, business travel, training that maintains the skill you already sell, bank charges on the business account and the workspace you use. Where something serves both work and private life, such as a phone or a car, most countries allow a fair proportion rather than the whole. Entertainment, ordinary clothing and commuting are the categories most commonly restricted or disallowed, and the rules differ by country.

Billingz Guides · Expenses

What counts as a business expense, and what does not

Short answer

One question decides most of it: would you have bought this if you did not do this work? A clear yes makes it a business expense. A clear no makes it private. A hesitation usually means it is mixed, which is not a refusal but a proportion, and the proportion needs a basis you could explain out loud.

The test that travels

The wording differs by country, often some version of wholly and exclusively for the purposes of the trade, and the wording matters less than the direction of the question. It asks about purpose, not about receipts. A receipt proves you spent money. It says nothing about why.

Which is why the same object can be a business expense for one person and not for another. A camera bought by a photographer and a camera bought by an accountant who likes photography are the same object and two different answers.

Things that are almost always allowed

Tools of the trade - software licences, equipment, materials, the hardware you work on. Large items are often spread over several years rather than deducted at once, which is depreciation.
Professional services - your accountant, a lawyer for a business matter, professional insurance.
Business travel - getting to a client or an event that is not your normal place of work. Commuting to a fixed workplace is generally not travel, it is getting to work.
Training that maintains what you already sell - keeping a current skill current. Training that qualifies you for something new is treated less generously in many countries.
Cost of running the business itself - business bank charges, payment processing fees, subscriptions the work depends on, domain and hosting.
Marketing - a website, advertising, printed material, the things that go looking for clients.

The grey zone, one at a time

This is where money is quietly lost by people claiming nothing, and quietly risked by people claiming everything.

Home office - a proportion, by one of two methods. A flat monthly amount where the country offers one, which is smaller and simpler, or a share of rent and utilities based on the area used and the time it is used. Claiming a room as exclusively business can have consequences beyond income tax in some countries, so ask before choosing that route.
Phone and internet - the work proportion. A separate business line removes the argument entirely and often costs less than the time spent justifying a split.
A laptop used for both - the work proportion, and be realistic. A machine you also game on in the evenings is not a hundred percent business, whatever the invoice says.
The car - the most rule-bound item on this list. Many countries offer a per-kilometre rate that is far simpler than tracking actual costs, and some treat a car put fully through a business as a taxable benefit to you. Choose the method deliberately, once, with advice.
Meals and entertainment - restricted almost everywhere and disallowed in some places. A meal while travelling for work is usually treated differently from a meal to win a client. Note who and why on the receipt itself.
Clothing - protective gear, uniforms and branded workwear generally qualify. Ordinary clothing generally does not, however specifically you bought it for work.
Coffee at your desk - the small stuff. Some countries allow modest refreshment costs, most treat solitary coffee as your own life. Not worth the risk it creates relative to the tax it saves.

Mixed use is a proportion, not a coin flip

When something serves both the work and the life, you are not choosing between claiming all of it and claiming none of it. You are choosing a fraction and being able to say where the fraction came from.

A basis can be simple. Two of three rooms, four days in seven, a month of itemised phone usage taken as representative. What it cannot be is a number chosen because it felt fair. If a tax office ever asks how you arrived at sixty percent, the answer needs to be a method and not a mood.

Where a country offers a fixed rate or a flat allowance for a common case, and many do for home working and mileage, take it unless your actual costs are dramatically higher. It is smaller, it is unarguable, and it costs you no evenings.

The documentation that makes it stand

A receipt in your own business name - particularly where VAT is involved, since a receipt made out to someone else generally cannot support a deduction of that VAT.
The reason, recorded at the time - three words on the receipt while you remember. A year later nobody, including you, can reconstruct why that dinner happened.
The basis for anything apportioned - written down once, applied consistently, not recalculated to suit the year.
Paid from the business account - not proof of anything by itself, but it keeps the two lives separate, which is the single habit that makes all of this easy.

How to capture all of this without it becoming a second job is its own guide: how to track business expenses.

Two things people get backwards

A deduction is not a discount. Spending 1,000 on something you do not need, to save tax at 30%, leaves you 700 poorer and holding the thing. The deduction reduces the tax on your profit; it never refunds the purchase. Buy what the business needs, then take what is due.

VAT and income tax are two separate questions. Whether you can reclaim the VAT on a purchase and whether the cost reduces your taxable profit are decided under different rules and can disagree about the same receipt. Which taxes reach you covers why the two never merge.

Common questions

What is the basic test for a business expense?

Whether the cost was incurred for the business rather than for you. Most countries express it as wholly and exclusively for the purposes of the trade, or something close to it, and the wording matters less than the direction of the question: would you have bought this if you did not do this work? A clear yes makes it straightforward. A hesitation usually means the cost is mixed, which is a different treatment rather than an automatic no.

Can I claim something I use for both work and personal life?

Usually a fair proportion of it, not all of it. A phone used two thirds for work is a two-thirds claim, and the proportion needs a basis you could explain rather than a number you liked. Some countries set fixed rates or flat allowances for common cases precisely to avoid the argument, and where such a rate exists it is almost always easier to take it than to defend your own calculation.

Can I claim my home office?

In most countries yes, on a proportion, and the method differs. Some allow a simple flat amount per month, some a share of rent and utilities based on the floor area used for work and the time it is used. The flat method is smaller and safer. Claiming a whole room exclusively can carry consequences elsewhere, including on the property itself in a few countries, so it is worth one conversation with an accountant before choosing the method.

Are client lunches deductible?

Partly, in many countries, and rarely in full. Entertainment is one of the most restricted categories there is: some states allow a percentage, some disallow it entirely, and some separate a meal while travelling on business from a meal to win a client. It is also the category most often examined, so the note of who you met and why matters more here than anywhere else on this page.

Can I put clothes through the business?

Only if they would not reasonably be worn otherwise. Protective clothing, uniforms and branded workwear generally qualify. The suit bought for client meetings generally does not, in most countries, on the reasoning that it is ordinary clothing whatever your intention was when you bought it. Photography and performance are the usual places this gets argued.

Does buying something to reduce my tax save me money?

No. A deductible cost reduces the tax on your profit, it does not refund the purchase. Spending 1,000 to avoid tax at 30% leaves you 700 poorer with an object you did not need. Buy things because the business needs them, and take the deduction because it is due, in that order.

Built for this

Billingz does not decide what is deductible, and no software honestly can. What it does is keep the record in a state your accountant can work from: captured at the moment, categorised, VAT separated, and attached to the payment it belongs to.

See how Billingz works

This guide is general information, not tax advice. What is deductible, at what proportion, under which method, and with what documentation is set by national law and changes regularly, and several categories described here as restricted are disallowed entirely in some countries and allowed in full in others. Billingz is not an accountant and does not warrant that any treatment described here applies to you. Before claiming anything in the grey zone, particularly a vehicle or a room in your home, ask a local accountant.