# Accounting for self-employed IT contractors

Canonical: https://taxmo.co.uk/trades/it-contractors
Last updated: 2026-11-06

IT contracting is mostly day rates, a laptop and a home office, which makes the books simple and the status question less so. Taxmo handles the books, the invoicing from tracked time and VAT once you are registered.

## What Taxmo does for IT contractors

- Income and expenses in one place: Record what you earn and spend in categories, and see your profit and what to set aside for tax as you go. On every plan.
- Time tracking: Track billable hours with a timer and turn them into an invoice. On Pro.
- Invoices and quotes: Send quotes and invoices from the same records, and see which invoices are still unpaid. A few a month on Free, without a cap on Starter and Pro.
- VAT returns, once you are registered: Taxmo works out the nine boxes from your approved entries, shows where each figure comes from and files the return to HMRC over Making Tax Digital. On Starter and Pro.
- Connect your bank: Connect your bank read-only or upload a CSV statement. Each transaction waits for your approval before it counts. On Starter and Pro.
- Receipt scanning: Photograph a receipt or forward it on WhatsApp, and Taxmo reads it into an expense for you to check. On Starter and Pro.
- Capital allowances: Keep a register of the assets you claim capital allowances on, with the annual investment allowance and writing down allowances worked out for each. On Pro.

## Expenses IT contractors commonly claim

- Computers and equipment: Equipment you keep, for example computers or printers, is an allowable expense on the cash basis or claimed through capital allowances on traditional accounting. Source: https://www.gov.uk/expenses-if-youre-self-employed/office-property
- Software and subscriptions: Computer software your business uses for less than two years, and trade or professional journals and memberships related to your work. Source: https://www.gov.uk/expenses-if-youre-self-employed/office-property
- Working from home: The business part of running costs if you work from home, or a flat monthly rate under simplified expenses if you work enough hours there. The flat rate does not include phone or internet, which you claim separately. Source: https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
- Phone and internet: The business share of phone, mobile and internet bills. Only the business part of a mixed-use bill counts. Source: https://www.gov.uk/expenses-if-youre-self-employed/office-property
- Training: Courses that keep you up to date with technology used in your industry, or develop skills related to changes in it. Training to move into an unrelated area is not allowable. Source: https://www.gov.uk/expenses-if-youre-self-employed/training-courses
- Business insurance: Any insurance policy for the business, for example public liability insurance. Source: https://www.gov.uk/expenses-if-youre-self-employed/legal-financial

## Rules worth knowing

- Off-payroll working (IR35): If you work through your own limited company, the off-payroll working rules can apply where you would have been an employee if you worked for the client directly. In most cases the client decides your status. Your company decides only when the client is a small business outside the public sector. Source: https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
- Checking your status as a sole trader: Whether a contract is self-employment depends on the working arrangement. HMRC's Check employment status for tax tool gives HMRC's view from your answers. Source: https://www.gov.uk/guidance/check-employment-status-for-tax

Current figures, each with its GOV.UK source: https://taxmo.co.uk/uk-tax-rates

## Common questions

### Does Taxmo work for limited companies?

Taxmo is built for sole traders. If you contract through your own limited company, the dividend and Corporation Tax rates on our UK tax rates page apply to you, and the company has its own filing obligations.

### Can I use the trading allowance and claim expenses?

No. The trading allowance is a tax-free amount of trading income each year, and if you use it you cannot also claim expenses or capital allowances. Check the current amount on GOV.UK or on our UK tax rates page.

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General information from GOV.UK guidance, not tax advice. Rules and figures change, so verify on GOV.UK using the links on this page before relying on them.