If you're self-employed or a landlord in the UK, the run-up to the Self Assessment deadline can be a stressful time. Many of us wisely choose to hire an accountant to handle the numbers, ensuring everything is accurate and above board. But this brings up a crucial question: can you claim that accountant's bill as a business expense?
The answer is both yes and no, and the distinction is vital. It’s a common point of confusion, but getting it right can save you money and keep you compliant with HMRC.
Here’s a simple, no-jargon breakdown of what you can and can't claim.
The Golden Rule: Business vs. Personal
When it comes to allowable expenses, HMRC's logic is generally straightforward. You can claim for costs that are "wholly and exclusively" for the purpose of your trade or business.
The confusion with accountancy fees arises because a Self Assessment tax return (the SA100 form) is a personal tax liability. It summarises all your income—which might include employment, savings interest, and capital gains, as well as your business profits.
Because the tax return itself is considered a personal obligation, HMRC is clear on this point.
What You CANNOT Claim
According to the official government guidelines (GOV.UK), you cannot claim for the cost of preparing and submitting your personal Self Assessment tax return.
This includes the fees your accountant charges for:
- Completing the main SA100 tax return.
- Calculating your personal tax liability or 'balancing payment'.
- Advising on your personal tax affairs.
HMRC sees these as costs related to your personal tax compliance, not as costs incurred purely for running your business.
What You CAN Claim
So, what part is allowable? You can claim the accountancy fees for work that relates specifically to your business or rental property.
This is the key. The costs you can claim include:
- Fees for preparing your annual business accounts (e.g., your sole trader accounts).
- Fees for preparing your annual rental accounts (e.g., your property income and expenditure statements).
- Costs for specific business-related advice (e.g., advice on your business structure or VAT registration).
The work involved in preparing these specific sets of accounts is a legitimate business cost, entirely separate from the act of filing your personal tax return.
The All-Important 'Apportionment'
This is the part where most people get tripped up.
Your accountant will likely send you a single invoice that covers all their work: preparing your business accounts, filling in your Self Assessment return, and submitting it.
You cannot claim this entire invoice as an expense.
You must ask your accountant to provide a breakdown of their fees. They should be able to tell you, for example, that "£250 was for preparing your sole trader accounts, and £150 was for preparing and filing your personal tax return."
In this case, you would:
- Claim £250 as an allowable business expense.
- Personally pay the £150 (this part is not tax-deductible).
If you receive a single, un-itemised bill, you must make a "fair and reasonable" apportionment yourself. However, it is always best practice to have your accountant provide the split for your records.
Putting It All Together: An Example
Let's say you're a freelance graphic designer.
- You pay an accountant £400.
- The accountant prepares your annual business accounts, showing your trading profit.
- They also use these figures, plus details of your savings interest, to complete and file your main Self Assessment tax return.
- You ask for a breakdown. The accountant confirms that preparing the business accounts cost £250, and completing the personal tax return cost £150.
- On your tax return, you can list the £250 as an allowable expense under "Legal and financial costs." The remaining £150 is a non-deductible personal cost.
Our Final Takeaway
While it may seem like a small detail, correctly separating your accountancy fees is essential for an accurate tax return.
To summarise, the cost of preparing your business accounts is allowable. The cost of preparing your personal tax return is not.
When in doubt, always ask your accountant for an itemised bill. It protects you, keeps your records clean, and ensures you are claiming exactly what you’re entitled to—and not a penny more.
Please refer to the official GOV.UK guidelines
