Can I claim payments to subcontractors and freelancers as a business expense?

Yes — payments to subcontractors and freelancers for work that is part of your business are fully allowable as a business expense. For example: a web developer who hires a designer for a project, a plumber who subcontracts specialist work, or a consultant who brings in additional expertise — all can deduct these costs. Important: ensure the person you hire is genuinely self-employed and not an employee — if HMRC determines they should be treated as an employee, you could have PAYE and NI obligations. In the construction industry, the Construction Industry Scheme (CIS) applies — you must deduct tax at source from payments to subcontractors unless they are registered for gross payment. Keep invoices from all subcontractors. Claim under 'Subcontractors' or 'Cost of sales' on your SA103.

  • Subcontractor and freelancer payments are fully deductible when related to your business
  • Ensure the person qualifies as self-employed, not an employee
  • Construction industry: CIS rules apply — deduct tax at source from unregistered subcontractors
  • Get and retain invoices from all subcontractors
  • Claim under 'Subcontractors' or 'Cost of sales' on SA103

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