A deduction is simply a business cost subtracted from your income before tax is worked out. Spend $1,000 on something that is genuinely for your work and your taxable profit falls by $1,000. Depending on your income, that can save a few hundred dollars or pounds, because it reduces both income tax and the tax on self-employment profit. The catch is that every deduction has to be real, business-related and provable. This checklist covers what freelancers and creators usually claim in the US and UK, and where people go wrong.
Rules and limits change, so treat the figures below as a guide and check the IRS or GOV.UK for the current number before you file. None of this is tax advice.
Costs that are usually fine in both countries
- Platform and payment fees. Upwork, Fiverr, Etsy and payment processors charge you to earn money. Depending on how the platform reports your income, these are generally treated as business expenses. Check you aren't deducting something already netted out.
- Software and subscriptions. Editing tools, design apps, accounting software, cloud storage, a website and domain name.
- Equipment. Computers, cameras, microphones, lighting. How you claim them differs by country (below).
- Phone and internet. Only the business share. If you use your phone half the time for work, claim half.
- Professional fees. An accountant, a legal review of a contract, bank charges on a business account.
- Marketing. Ads, a portfolio site, business cards, paid promotion of your content.
- Training that keeps your current skills sharp. A course in your existing field is the safe version. A course that trains you for a new trade is a different question.
- Insurance that covers the business, such as professional indemnity.
United States
Home office. If part of your home is used regularly and exclusively for work, you can claim it. The simplified method allows $5 per square foot for up to 300 square feet, a maximum of $1,500. The alternative is a share of actual home costs, which takes more record-keeping. A kitchen table you also eat at doesn't qualify.
Equipment. You can depreciate equipment over several years or, in many cases, deduct it in the year you buy it. There is also a de minimis safe harbor for items costing up to $2,500 each, which lets you expense small purchases outright. A tax professional can tell you which route suits you.
Meals. Business meals are generally deductible at 50%. Entertainment is generally not.
Start-up costs. New businesses can generally deduct up to $5,000 of start-up costs in their first year, with the rest spread over time.
Health insurance and retirement. Self-employed people can often deduct health insurance premiums, and contributions to a SEP-IRA or solo 401(k) reduce taxable income too. These sit outside the business-expense list but matter a lot.
Half of self-employment tax is deductible, which our calculators apply automatically. There is also a deduction of up to 20% of qualified business income, which our calculators leave out, so real bills can be lower than our estimates.
Vehicle. Business mileage can be claimed at a rate the IRS sets each year, or as actual costs. Commuting from home to a regular workplace doesn't count, and you need a mileage log.
United Kingdom
Trading allowance. If your total trading income is small, you can use a £1,000 allowance instead of claiming expenses. You can't use both on the same income, so compare which is bigger.
Use of home. Simplified expenses let you claim a flat monthly amount based on hours worked at home: £10 for 25 to 50 hours, £18 for 51 to 100 hours, and £26 for 101 hours or more. Many freelancers find this easier than splitting actual bills.
Equipment. The Annual Investment Allowance lets most sole traders deduct the full cost of qualifying equipment up to a high annual limit, which covers nearly every laptop or camera purchase.
Vehicle. Simplified mileage is 45p per mile for the first 10,000 business miles and 25p after that. Again, the journey has to be for business, not ordinary commuting.
Pensions. Contributions to a personal pension attract tax relief, handled separately from business expenses.
What usually isn't allowed
- Everyday clothing, even if you only wear it to work. Uniforms and protective gear are different.
- Entertaining clients (UK) and entertainment (US).
- Fines, penalties and anything personal that happened to be bought on a business card.
- The private share of a mixed-use cost. Claim the business percentage only.
- Costs you can't prove. No receipt and no record is the most common reason a claim collapses.
What a deduction is really worth
Because deductions cut profit, they cut every tax calculated on profit. In our US example, a single filer with $35,000 of profit saves about $240 for every extra $1,000 of genuine deductions, and the UK equivalent saves about £260 per £1,000. You can check both numbers in the creator tax estimator. The point isn't to hunt for deductions. It's to avoid missing the ones you've already paid for.
Records worth keeping
Keep receipts and invoices, platform payout statements, a mileage log if you claim a vehicle, and notes showing how you worked out any business share of mixed costs. The IRS generally has three years to review a return, and often longer in some situations, so keep records at least that long. In the UK, self-assessment records generally need to be kept for at least five years after the 31 January filing deadline. A folder per tax year, a spreadsheet and photographed receipts are all you need.
Three mistakes that cost money
Mixing personal and business accounts. It turns a ten-minute sort into an afternoon, and makes it harder to prove anything. Claiming 100% of a mixed-use cost. Your phone and internet are the usual offenders. Forgetting the bigger picture. Deductions lower tax, but they don't remove it, so keep setting money aside. The quarterly tax guide and the US and UK tax guide cover how to do that.
Last reviewed October 2026. Figures are estimates for planning, not tax advice. See the disclaimer and methodology.