Understanding allowable expenses for online coaching businesses
As an online coach operating as a sole trader or through your own limited company, knowing what you can claim for tools and equipment is fundamental to managing your tax position effectively. The UK tax system allows you to deduct legitimate business expenses from your taxable income, reducing your overall tax liability. For the 2024/25 tax year, understanding these rules can save you significant amounts – often thousands of pounds annually. Many coaches miss out on legitimate claims simply because they're unaware of what qualifies or how to track these expenses properly.
The fundamental principle from HMRC is that expenses must be incurred "wholly and exclusively" for business purposes. This means the primary reason for purchasing any tool or equipment must be for your coaching business. If you use items for both business and personal purposes, you can only claim for the business portion. This is where detailed record-keeping becomes essential, and where modern tax planning software can transform what might seem like a complex administrative task into a straightforward process.
Essential technology and equipment claims
When considering what online coaches can claim for tools and equipment, technology forms the backbone of most legitimate deductions. Your computer, laptop, or tablet is typically your most significant business tool. If purchased solely for business use, you can claim the full cost. For mixed-use items, you must apportion the cost based on business usage – for example, if you use your laptop 70% for coaching activities and 30% personally, you can claim 70% of the cost.
Other essential technology includes:
- Webcams, microphones, and recording equipment for client sessions
- Headsets and audio equipment for clear communication
- Lighting equipment and backdrops for professional video quality
- External hard drives for storing client materials and session recordings
- Printers and scanners for administrative documents
Under the Annual Investment Allowance (AIA), you can deduct the full value of equipment purchases from your profits before tax, up to £1 million per year. For most online coaches, this means you can claim the entire cost of qualifying equipment in the year of purchase rather than spreading the deduction over several years. Using a dedicated tax calculator can help you model the impact of these purchases on your tax position.
Software, subscriptions, and digital tools
The digital nature of online coaching means software and subscription costs represent significant deductible expenses. When evaluating what online coaches can claim for tools and equipment, don't overlook these recurring costs that are essential to delivering your service. Common claimable software includes:
- Video conferencing platforms (Zoom, Google Meet, Microsoft Teams)
- Scheduling and booking software (Calendly, Acuity)
- Client management systems and CRM platforms
- Email marketing software (Mailchimp, ConvertKit)
- Project management tools (Asana, Trello)
- Graphic design software for creating course materials
- Accounting and tax planning software
Subscription costs are typically deductible as they're incurred, meaning you can claim the monthly or annual fee in the tax year you pay it. For one-off software purchases, these generally qualify under the AIA like physical equipment. The key is maintaining records of all subscriptions and software costs, which is where a comprehensive tax planning platform becomes invaluable for tracking these expenses throughout the year.
Home office and workspace expenses
For most online coaches working from home, understanding what you can claim for your workspace is crucial. You can claim a proportion of your household costs based on the space used exclusively for business and the time you spend working from home. There are two methods for claiming these expenses:
The simplified method allows you to claim a flat rate based on the hours you work from home each month: - 25 to 50 hours: £10 per month - 51 to 100 hours: £18 per month - 101+ hours: £26 per month
The actual costs method involves calculating the proportion of your home used for business and claiming that percentage of costs like: - Rent or mortgage interest (not capital repayment) - Council tax - Utilities (gas, electricity, water) - Internet and telephone bills (business portion) - Buildings and contents insurance
Additionally, furniture specifically for your coaching business qualifies – such as an office chair, desk, filing cabinets, or bookshelves used primarily for business materials. These are considered equipment and can be claimed through the AIA if they meet the criteria.
Capital allowances vs. revenue expenses
Understanding the distinction between capital and revenue expenses is essential when determining what online coaches can claim for tools and equipment. Revenue expenses are day-to-day running costs that provide short-term benefit, such as software subscriptions, internet bills, or replacement printer ink. These are fully deductible in the year they're incurred.
Capital expenses are for items that will be used in the business long-term, typically lasting beyond one tax year. This includes computers, cameras, office furniture, and other equipment. These qualify for capital allowances, primarily through the AIA which allows full deduction in the year of purchase. The current AIA threshold of £1 million is more than sufficient for most coaching businesses, meaning you can immediately deduct the entire cost of equipment purchases from your taxable profits.
For items costing less than £2,000, you may be able to use the temporary full expensing for companies or the cash basis for sole traders, which simplifies claiming for smaller equipment purchases. Proper categorization of expenses is crucial for accurate tax reporting, and using dedicated tax planning software ensures you maximize your claims while maintaining compliance.
Record-keeping and documentation requirements
When claiming for tools and equipment, maintaining proper records is non-negotiable. HMRC requires you to keep receipts and records for all business expenses for at least 5 years after the 31 January submission deadline of the relevant tax year. For equipment claims, you should retain:
- Purchase receipts and invoices
- Bank statements showing payment
- Records of business use percentage for mixed-use items
- Documentation supporting the business purpose of each purchase
- Records of any items disposed of or sold
Digital record-keeping has transformed this process, allowing you to photograph receipts and store them securely in the cloud. Modern tax planning platforms often include receipt capture features that automatically extract key information and categorize expenses, saving hours of administrative time while ensuring accuracy. This becomes particularly valuable when you need to demonstrate to HMRC exactly what online coaches can claim for tools and equipment during an enquiry.
Maximizing your claims while staying compliant
Understanding what online coaches can claim for tools and equipment is only half the battle – implementing a system to maximize these claims while remaining compliant is where the real tax savings occur. The most successful coaches establish processes for:
- Immediately recording expenses when they occur
- Separating business and personal purchases using dedicated accounts
- Regularly reviewing expense categories to identify missed claims
- Using tax scenario planning to model equipment purchase timing
- Consulting with accounting professionals for complex purchases
With the right systems in place, you can confidently claim everything you're entitled to while avoiding the common pitfalls that trigger HMRC enquiries. The question of what online coaches can claim for tools and equipment becomes less about uncertainty and more about strategic business planning. By leveraging technology to handle the administrative burden, you can focus on growing your coaching business while optimizing your tax position.
Taking control of your expense claims transforms tax compliance from a source of stress into a strategic advantage. Whether you're just starting your coaching business or looking to optimize an established practice, understanding exactly what online coaches can claim for tools and equipment represents one of the most direct ways to improve your profitability while remaining fully compliant with HMRC requirements.
