Claiming Expenses as a Sole Trader

‘Money for nothing’ isn’t a term that exists in today’s business world, which makes claiming all the tax reliefs you can important. For sole traders in particular, claiming tax relief means you keep more of your hard-earned cash, funds that can be reinvested to help grow your business activities further. Unbeknown to most, several business costs can be claimed as expenses. Here we share a helpful guide to claiming the expenses you’re entitled to as a sole trader.

What expenses can I claim?

There may be numerous business costs that you incur as a sole trader. Many are tax deductible meaning you won’t have to pay tax on these items. Claiming the expenses you are entitled to can therefore lower your tax bill significantly. The following are expenses you can claim as a sole trader:

  • Business banking – including overdraft fees, interest costs and credit card charges
  • Accountancy fees and selected legal costs
  • Professional subscriptions – including book, magazine and newspaper subscriptions
  • Business premises, even if you work from home
  • Advertising, marketing and PR
  • Tools, equipment and goods
  • Telephone
  • Travel – including accommodation, mileage, parking and congestion charges

All claimed expenses must be purchases that have been made exclusively for the purpose of your business. Expenses that have a dual purpose, i.e. are for professional and personal, can be claimed in part.

How can I start claiming?

Claiming for the expenses you’re entitled to is simple. Claims are filed with your annual Self Assessment tax return. HM Revenue and Customs (HMRC) can ask for evidence of each claim filed so make sure you keep records of all sole trader expenses.

What records must I keep?

Receipts and invoices must be retained. Journey breakdowns and mileage should also be detailed to ensure any claims can be validated. Most sole traders looking to claim mileage keep a spreadsheet up-to-date to ensure this information is to hand should HMRC come knocking.

HMRC recommends that sole traders keep records for their tax returns for at least 22 months from the end of the tax year to which they relate. Limited companies should keep records for longer, for at least six years from the end of the accounting period which they relate to.

We’re in the business of helping our clients save money and provide a full range of accounting services as a result. Contact our team today for assistance and discover ultimate peace of mind for your business finances.