Is therapy and counselling
tax deductible?

No, for yourself. Therapy and counselling are health costs that benefit you personally, and HMRC's manual says medical expenditure on ensuring or restoring good health is not generally allowable (HMRC BIM37940). Counselling you provide for employees is a staff cost, and certain welfare counselling for employees is exempt for them.

Running a business can be stressful, and many sole traders use therapy or counselling to cope. Unfortunately the tax rules treat mental health treatment like physical health treatment: it benefits you as a person, so it is personal. Two things are different: business coaching focused on skills, and support you provide for employees.

Is therapy and counselling tax deductible?

The HMRC rule

A cost is only allowable if it is incurred wholly and exclusively for the business. Everyday living costs, health, appearance and leisure have a personal purpose, so they are not allowable even when they help you work. The rule comes from HMRC Business Income Manual BIM37007: wholly and exclusively, Expenses if you’re self-employed.

HMRC's manual says medical expenditure on ensuring or restoring good health is not generally allowable (BIM37940). Only costs incurred wholly and exclusively for the business are allowable (expenses overview). Support for employees is a staff cost (staff expenses).

When you can claim it

• Clinical supervision required for your own practice as a therapist or counsellor.
• Business coaching focused on skills you use in the business.
• Employee assistance programmes and counselling for staff.
• Mental health first aid training for the workplace.

When you cannot

• Your own therapy or counselling.
• Life coaching with a personal focus.
• Wellbeing retreats and apps for personal use.
• Therapy for family members.

What to claim instead

If you are a therapist or counsellor, supervision required by your professional body is part of your practice and allowable. For your own wellbeing, NHS talking therapies are free, and private therapy is paid from after-tax income.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? It is a running cost, so on the cash basis it counts when you pay it and on traditional accounting when you incur it. Nothing about it needs spreading over later years.
4. Is there a specific rule? For therapy and counselling, the deciding rule is personal costs: a cost is only allowable if it is incurred wholly and exclusively for the business. Everyday living costs, health, appearance and leisure have a personal purpose, so they are not allowable even when they help you work.

Worked example: a counsellor’s costs

A self-employed counsellor pays £1,200 a year for clinical supervision required by her professional body, and £900 for her own personal therapy. The supervision is allowable as part of her practice. Her own therapy is personal.

The wholly and exclusively test

An expense is allowable only if it is incurred wholly and exclusively for the purposes of the business. HMRC's manual explains that some costs have an intrinsic duality of purpose: they meet a personal need, such as health, warmth or appearance, whatever else they do. Where a personal purpose is part of the reason for the spending, even a small part that cannot be separated, the whole cost fails the test.

Coaching and training

Coaching that improves skills you use in your business, such as sales, leadership or presenting, can be allowable training. Life coaching or coaching focused on personal goals is personal. If a programme mixes both, only a clearly business element could be claimed.

Therapists and supervision

For counsellors and psychotherapists, clinical supervision is part of professional practice and often a condition of membership. It is allowable. Personal therapy required during training to qualify is part of initial training, and generally not allowable.

Employees

Counselling services for employees, such as employee assistance programmes, are allowable staff costs, and welfare counselling for employees is generally exempt from tax for them. Mental health first aid training for staff is allowable.

Paying personal costs from the business account

Sole traders often pay personal costs from the account they use for the business. That is allowed, but the payment is drawings, not an expense. Record it that way in your bookkeeping so it does not end up in your expense totals. If your accounts do include it, the full self-employment pages have a disallowable column, box 45 for other expenses, where the same amount is added back.

Stress and burnout

Stress, anxiety and burnout caused by running a business are real, but the cost of treating them is still personal under the tax rules, because the treatment benefits your health as a whole. NHS talking therapies can be accessed by self-referral in England, without a GP appointment, and cost nothing. Private therapy is paid from after-tax income.

Where it goes

Supervision and business coaching go in other business expenses, box 30. Employee counselling goes with staff costs, box 19.

Where it goes on your return and in MTD

It is not an allowable expense, so it does not reduce your profit. Where your bookkeeping shows it as a business payment, record it as drawings, or include it and add it back as a disallowable expense on the full self-employment pages.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

The accounting basis changes when a cost counts. On the cash basis, the default for sole traders since 2024/25, it counts when you pay it; on traditional accounting, when you incur it, with things you keep claimed through capital allowances.

How much an allowable cost saves

An allowable expense does not come back to you in full: it reduces your profit, so it saves tax at your marginal rate. For a sole trader in England, Wales or Northern Ireland that is 26p in the pound at the basic rate (20% Income Tax plus 6% Class 4 National Insurance) and 42p at the higher rate. The sole trader tax calculator works out the figure for your own profit.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

You do not need business records for personal costs. If a personal cost was paid from the business account, record it as drawings so it is excluded from your expenses. For any business element you do claim, keep the receipt and a note of the business reason.

If Making Tax Digital for Income Tax applies to you (qualifying income over £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028), the records must be digital, and each quarter's costs go into a quarterly update. Check your date with the MTD requirement checker.

Common mistakes

• Claiming personal therapy as a business cost.
• Claiming life coaching as training.
• Missing supervision costs as a therapist.

Related expenses

This item sits in the other business expenses category, alongside art and collectibles, care home fees, charity donations, clothing and workwear, cryptocurrency, fines and penalties, funeral costs and furniture. The A to Z of expenses answers the same question for every other cost.

If you record your costs in TapTax, each one lands in the HMRC category it belongs to, with its receipt attached, so your quarterly updates and year-end return use the same figures.