What Are My Allowable Expenses as a Sole Trader?

Woman writing in diary

As a self-employed business owner, you are eligible to claim back expenses on your running costs. You can deduct some of these costs to work out your taxable profit as long as they are allowable expenses.

Allowable expenses do not include money taken from your business to pay for private purchases. If you are unsure which expenses qualify as allowable expenses it is best to discuss this with your accountant. Today’s blog aims to help you save money when it comes to claiming back tax on various expenses that you may not have considered as allowable.

Some costs you can claim as allowable expenses:

  • Office supplies – this includes stationery and phone bills.
  • Clothing expenses – uniforms for you and your employees (including your business logo)
  • Business premises – this includes heating and lighting.
  • Travel costs – for example fuel, parking or bus fares.

There are of course, some exceptions to these expenses. For example, if you claim  your £1,000 tax-free ‘trading allowance’ then this prevents you claiming expenses such as the above.

Working from home:

If you spend a certain amount of your time working from home, then you can claim a proportion of your utility bills as expenses. This includes bills such as heating and electricity. 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 back as expenses. This expense also differs depending on how many days and hours you use your home for work.

As a sole trader you can avoid using complex calculations to work out your expenses, by using simplified expenses. Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs. You can use these if it feels it suits your business. Simplified expenses are useful for calculating working from home and vehicle expenses.

The best thing to do is keep as much of this as simple and stress free as possible, but at the same time, you could be missing out potential tax reductions if you miss out on getting the right advice.

If you have any questions about allowable expenses as a sole trader, please contact us at info@future-cloud.co.uk!

We also have a free guide of the expenses you can claim for, so please do get in touch and we can send one over! Start saving today!