What to check if you use an app to track expenses when self-employed.

These days there are a wide range of smart phone applications (apps) available to help those with self-employment income keep on top of their finances and taxes. They offer a range of services which may include helping you to track your expenses manually and/or via open banking technology and categorising them for tax purposes. You can read about open banking on MSE’s website.

The apps can be very helpful but often their purpose is to be a convenient administrative tool; not necessarily to apply the detailed tax rules. With some apps, taking the totals on face value can lead to your tax return being wrong. At a time when HMRC are focussing on closing the tax gap of small businesses, here are a few key points to think about before relying on app-generated totals.

Have you categorised expenses properly?

When calculating your profit for tax purposes, you can deduct any expenses ‘wholly and exclusively’ paid out for the purposes of your business. This might include expenses such as car, van or other travel expenses and administrative costs, including mobile phones.

Expenses which are not allowed include:

• Expenses that potentially have a business purpose but are specifically disallowed by HMRC, for example a parking fine even if incurred on a business journey.
• Personal expenses, which could include subsistence costs (such as lunches when you are at your normal workplace) and clothing - unless it’s something like specific reflective clothing for cycling at night which you only use when delivering food.

We have more information about business expenses when self-employed in our business expenses: allowable for tax section.

The apps will usually allow you to label expenses as business or personal. This is sometimes called ‘tagging’ expenses. Make sure you have taken care to allocate your expenses between the categories correctly - that is, only tag allowable business expenses as business! Take particular care if you have set up rules to automatically tag regular transactions. See below if expenses are only part business – you might initially tag them as business but then need to made an adjustment. 

Have you made any necessary business/private apportionment?

Many types of expenditure have both personal and business elements — for example, a mobile phone contract, home broadband, or vehicle costs. You may have to apportion your costs to arrive at the allowable business amount. For example, if your phone bill is £80 a month and you use it 50% for business you must make sure that £40 is the figure used in your tax return.

Not all apps allow you to input a percentage of business use. They may let you attach a note about an adjustment needed to a business expense, but that note won’t automatically change the numbers. You may have to do this manually at the end of the year.

As our CIOT colleagues have reported, this is an area HMRC is increasingly scrutinising — with evidence that many taxpayers are getting it wrong.

Have you double counted any expenses?

Many apps can import data from your bank account via open banking, allowing business expense details to be automatically captured. However, if you also enter your receipts into the app manually, you might accidentally include the same item twice. It is important to run a quick sense-check to make sure each expense is recorded only once.

This also applies to platform fees or commissions. Although these will appear on any statements you receive and are an allowable expense, most apps will record the net amount paid into your bank account, that is, after any platform fees and commissions etc have already been deducted. So, they should not be entered again manually.

  Read our website guidance for the strict position for dealing with these types of income and expense figures in your tax return. 

Are you planning on using HMRC’s mileage allowance?

If you use a vehicle for business, you can choose between:

• Claiming HMRC’s simplified mileage allowance as explained in the ‘car, van and travel expenses’ section on our common expenses page (45p per mile for cars/vans, 24p for motorcycles, etc.) or
• Claiming a business proportion of actual vehicle running costs (fuel, insurance, repairs, etc.)

You can’t claim both methods. If you are going to use a mileage allowance in your tax return, make sure you don’t also count any amounts captured in the app as actual vehicle running costs— or you could end up claiming twice.

Do you need to make any other adjustments?

Even where expenses are allowable, some may require further adjustments for tax purposes.

For example, if you are a private hire driver and have leased a car, there’s a special rule:

• If the vehicle emits more than 50g/km of CO₂, you must disallow 15% of the leasing cost (see HMRC manual BIM47725).
• Cars with emissions of 50g/km or below, including electric cars, don’t face this restriction.

Expense apps are unlikely to apply these detailed tax rules, so you will need to review whether any adjustments are needed before using the figures to submit your return.

Do you have more complex tax affairs?

General expense-tracking apps are often designed for basic situations and may not include advanced features needed by certain types of businesses or those that are higher earning — such as tools for handling VAT if you are a VAT-registered business or calculating capital allowances if you purchase a car for example. It’s important to choose an app that meets your business’s specific tax compliance requirements.

Looking ahead

HMRC can request evidence of your business expenses if they decide to do an enquiry into your tax affairs, and you’re legally required to keep records for at least five years after the filing deadline. Don’t rely on an app for this, in case you lose access or the app closes. Save copies of your original bank statements and receipts (either digitally or on paper) in a secure location, just in case.

HMRC’s Making Tax Digital programme for Income Tax is being rolling out in phases, starting in April 2026. Soon, many self-employed people and landlords will be required to keep records digitally and to send summaries of their business income and expenses quarterly to HMRC from compatible software. If you’re preparing for this change, check whether your expense app can export data or integrate with MTD-compatible accounting software. Choosing the right app now can save you a lot of work later.

Final thoughts

Expense tracking apps are powerful tools, but they’re not infallible. Think of them as an aid, not the final word on your expenses.

Before submitting your figures to HMRC in a tax return, take time to review, adjust, and understand the data the app has summarised. A few careful checks can prevent costly errors — and keep you on the right side of an HMRC compliance check!

Remember, even when you use digital tools, you remain responsible for ensuring your tax return is correct. If you’re unsure about any figures or adjustments, it’s always worth double checking the position. We produce a range of guidance to help you, including our self-employment guide. See our Getting help section for options if you need to speak to someone.

For more information on using apps and other technology for tax help and support, see our guidance. For more on choosing software for MTD, see our MTD for Income Tax page.