If you use traditional accounting, you must use capital allowances. If you buy a vehicle for business you can claim this as a capital allowance (providing you’re not using simplified expenses).įor equipment you buy and keep for business use, such as computers, you can only claim allowable expenses if you use cash basis accounting. And, you can’t charge for fuel or mileage for travel between your home and normal premises. Parking or speeding fines aren’t allowable expenses – they’ll have to come out of your own pocket. Disallowable expenses: what can’t you claim for? Allowable business expenses can be claimed for staff uniforms (44) and protective clothing (45). You can also claim for parking (40), train, bus, air and taxi fares (41), hotel room costs (42) and meals for overnight business trips (43). Allowable expenses also include car and van insurance (33), vehicle repairs (34) and servicing (35), fuel used for business (36), vehicle hire charges (37), vehicle licence fees (38) and breakdown cover (39). If you buy a vehicle for your business, you can claim it as a capital allowance. Vehicle, travel, accommodation and clothing Accountants, solicitors, surveyors, architects and other professional fees (31) can be claimed, professional indemnity insurance premiums (32), too. You can also claim for trade or professional journals (29) and trade body or professional organisation membership (30) if relevant to your business. Advertising, professional fees and others expensesĪllowable expenses can be claimed for advertising (27) your products or services in newspapers, magazines, directories, websites, etc, as well as marketing costs (28) such as direct mail, free samples and creating a website. If you use traditional accounting (ie where you record income and expenses by the date you invoiced or billed), irrecoverable debts (26) that are written off are allowable expenses. If you use cash basis accounting, the most you can claim for interest and incidental costs of obtaining loan finance is £500. Interest on bank and other business loans (21) and alternative finance payments (22), such as Islamic finance, can also be claimed as allowable expenses, as can bank, overdraft and credit card charges (23), hire purchase interest (24) and leasing payments (25). If you use cash basis accounting (ie you only record income or expenses when you receive money or pay a bill), the cost of equipment and tools (20) can also be claimed as an allowable expense. Allowable expenses also include postage (15), stationery (16), printing (17), small office equipment (18) and computer software/ink cartridges (19). Telephone (12), mobile (13) and broadband (14) are allowable expenses, but only for business use. Phone, broadband, stationery and other office costs So, for example, if you use one room in your six-roomed house for business, you can claim a sixth of your electricity and gas bills (or a flat rate amount under simplified expenses).īusiness premises and equipment repairs and maintenance (10) are also allowable expenses for sole traders, as are repairs on a room you use at home for business (11) or a share of a larger repair (eg to a roof). If you use your home for business, you can claim a proportion of your utility bills for business use. But what else can and cannot be claimed as an allowable expense when you’re a sole trader? Rent, mortgage, rates, utilities and insuranceĪllowable expenses can include property rent (1), mortgage interest (2) and council tax (3), business rates (4), water rates (5), electricity (6), gas (7), insurance (8) and security costs (9). The cost of buying goods for sale or use to deliver a service are allowable expenses, as are payments to sub-contractors, agency fees, wages, salaries and other staff costs (eg bonuses, pensions, benefits, employers’ NICs, training, etc). If a bill covers business and personal use, you must use a reliable method to work out what proportion was for business use before claiming allowable expenses (although you can claim a flat rate). To qualify as an allowable expense, something must be bought “wholly and exclusively” for business. Thankfully, many can be deducted as allowable expenses from your taxable profits to lessen your Income Tax bill. Business expenses are inevitable when you’re a sole trader.
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