What expenses can I claim as a digital nomad?

Making sure you are claiming the correct expenses is vital in paying the least amount of tax. For a limited company, any expenses you include will reduce your corporation tax by 19-25% of the expense, the percentage dependent on your profit levels.

For example, a £3,000 expense will reduce your corporation tax bill by £570 (assumed corporation tax rate of 19%).

Many digital nomads are unsure what expenses they can and can’t claim. Please do not make the mistake of paying a mix of business and personal expenditure through your business bank account, in the hope that ‘my accountant will pick out what is business and what is personal’. They may do, but lazy accountants may just wrongly assume your business expenditure is personal if they can see you paying for everything through your business account. If you aren’t sure if expenditure is business or personal – ask them!

As a rule, only costs related solely to your business activity will be tax deductible. If there is a personal element, the cost is not allowed. Let’s go over the common deductions digital nomads can or can’t claim.

Home office costs

If you have a dedicated space in your home where you work, you can claim a portion of the household costs as an expense. How much you can claim depends on many factors but in the UK the baseline amount is £6 per week. I have written a separate blog on this because it does get complex! So check that out if you want further details.

Co-working spaces

Instead of working from home, you may want to work from a coworking space. Many digital nomads like to do this as it adds a social component. These costs are fully tax deductible.

Travel expenses

Travel expenses are fully claimable IF the journey is solely business related. For example you are travelling to see a client or going to a business conference. You can’t claim if you are moving locations for leisure. If you are using a private vehicle you can claim 45p per business mile (or 25p for any over 10,000 in any given year). We recommend keeping a spreadsheet of your business trips, the purpose of each trip and associated costs.

Equipment and supplies

Digital nomads often rely on tech equipment to run their business smoothly. You can deduct the cost of:

Laptops, tablets and smartphones

• Software subscriptions

• Peripheral devices (e.g. printers, scanners, external drives)

• Office supplies (e.g. stationery, business cards)

Mobile phone and internet costs

As a digital nomad, having a good internet connection is crucial! You can claim for:

• Internet costs

• Mobile phone bills

• Virtual private network (VPN) subscriptions

Accountancy and bookkeeping costs

These are all fully tax deductible. Please be aware if you are trading via a limited company then fees for completing your personal tax return are not an allowable business expense. Any other professional fees relating solely to your business are deductible.

Insurance premiums

You can deduct the cost of insurance premiums related to your business, such as liability insurance or business interruption insurance. Any private insurance (e.g. travel insurance or health insurance) will most likely not be deductible as it is a private cost.

Advertising and Promotion

Marketing and advertising are essential to growing your business. Deductible expenses include:

• Online advertising (Google Ads, Facebook Ads)

• Website development and maintenance costs

• Graphic design and branding services

• Content creation and social media management tools

Training and Education

If you invest in training and education to enhance your skills and knowledge, you may be able to deduct the cost of registration fees, online courses, and other related expenses.

The same can apply if you visit conferences in order to enhance your knowledge and to network. Here, I also want to refer to what we discussed about travel expenses. If you go to a place with a specific business purpose, you can deduct the costs for this.

Bank Fees and Currency Conversion Charges

As a digital nomad, you may incur bank fees and currency conversion charges when receiving payments or transferring money between accounts in different countries.

To be able to claim it as a business expense, the bank account must be a business bank account. Make sure you have one of these set up and are not trading through your personal bank account.

Make sure to use a bank that does not charge you for using your debit card abroad too to reduce the amount you pay in currency fees.

Of course there are specific tax deductions for your trade depending on your business niche, but these are a few general ones you may not have considered.