I'm a web developer. When I buy a Mac I put it down as an allowable expense and receive a tax break on it. When I buy business cards, they go down as an advertising cost. My broadband is an 'office comms' cost. Etcetera etcetera. However when I spend time working on my own website to promote myself, I don't think I'm allowed to charge myself my hourly rate as an expense. Is there a way around this (legally, UK law) and if not, would it actually pay me to get someone else to maintain and develop my site just for the tax-break?

up vote 14 down vote accepted

Unless UK tax law has some strange twist, your own labor always zeros itself out. Imagine that you actually paid yourself, and you could claim that expense as the cost of doing business. However, you would also now have new income (from your new client - yourself). The income amount is equal to the expense amount; the net is zero.

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    Good thought process, but I also think this answer could be improved with a reference to something definitive (though I wouldn't know where to begin to look for it myself). – Osteoboon May 22 '13 at 5:31
  • I don't know where to begin looking for UK tax law, but if a US reference is any help, search within IRS publication 535, Business Expenses for the phrase "own labor", which appears in two different sections. – Edward Brey May 22 '13 at 11:04
  • Ok thanks, this makes sense. – Mere Development May 22 '13 at 12:36
  • You're likely to find anything to do with UK tax on the website gov.uk which I find very useful (but I haven't looked on this topic). Try a search on it. – authentictech May 24 '13 at 20:53

I don't think I'm allowed to charge myself my hourly rate as an expense

No! Well, not necessarily... if you run your business as a company, then you could bill the company for your time, but you would have to account for that personally; if you are (as tagged) self-employed then it is more clear - the payment would count as Drawings (ie post tax)

would it actually pay me to get someone else to maintain and develop my site just for the tax-break?

Unless I'm missing a nuance, you gain a tax deduction on allowable expenditure - and such expenditure has to be incurred.

So it seems a little strange to spend £x unnecessarily so that you can deduct 20% of £x from your tax bill. You're still 80% of £x down on the deal!

On the other hand, if you can use the time you would spend on the website in revenue generating work (and the revenue generated exceeds the cost of sub-contracting the website) then that would make sense.

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