Knowing what you can and cannot claim on expenses when you are a sole trader can be tricky. With so many rules from HRMC, it can be easy to miss some vital ones that could reduce your tax bill and keep more of your hard-earned cash in your pocket! This RJF Accounting guide will run through the top expenses to claim as a sole trader so you can start reducing your tax burden!
Expenses to Claim as a Sole Trader
Business travel expenses, including accommodation, may be categorised as business expenditures. A wide range of costs associated with your journey can potentially be claimed as expenses. Such expenses may include public transport fares, parking, tolls or congestion charges and taxi fees. Additionally, meals and incidental expenses incurred during the trip may also be claimable, providing they meet HMRC definitions for subsistence.
A plumber cannot work without his tools, and a web designer cannot design without a computer. If you need the tools of your trade to do your job, they are claimable as expenses. There are some exceptions to the rule, such as if the item is not required for business purposes or has an element of personal use. If in doubt, always speak to an accountant before claiming.
Bank & Card Charges
If you incur banking or card processing fees, these are legitimate business expenses and can be offset in your SATR. These include overdraft fees, credit card interest, loan repayments and interest. Again as with all costs, the interest or fees must be incurred as a business expense, not a personal one, which can get complex to calculate if you do not have separate bank accounts and cards for personal and business transactions.
If you hire an accountant to take care of your bookkeeping or annual returns as a sole trader, you can claim any costs involved as an expense. This can also include the cost of any cloud accounting software such as FreeAgent or Xero.
Goods & Materials
Any stock you buy to operate as a business, such as stock for resale or materials to complete a job, can be claimed as an expense. This can be anything from components to make products or pre-made products you need to operate as a business.
One of the most significant expenses you may claim as a sole trader is the cost of using your car. This cost can be claimed by claiming mileage at 45p per mile for the initial 10,000 miles and then 25p per mile for any subsequent miles travelled. You can also claim cycling miles at a rate of 25p per mile if you choose to be more eco-friendly and use pedal power instead! Currently, the mileage rules apply to all vehicles, including electric cars.
Advertising & Marketing
If you want to be successful in business, you need to be able to advertise and market your business. Most marketing and advertising can be claimed as legitimate business expenses, such as:
- Website design and running costs
- Adverts, both physical and digital
- Leaflets and business cards
- SEO and PPC
- Fayes and networking events
How Can RJF Accounting Help?
RJF Accounting has accounting teams based in Manchester and Macclesfield, ready to help you with all your accounting and tax advice needs. We offer in-depth and helpful services and can help you navigate troublesome waters that are tax!
We can help with all aspects of your Self Assessment Tax Return, including advising on what can and cannot be claimed as an expense.
If you want to know more about how we can help you speak to the team today about our services. You can call the team on 0161 5040629 or email us at email@example.com to see if we can help you get your plans off the ground! We are open Monday to Friday, 9 am – 5 pm!