Claiming expenses as a sole trader

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A sole trader can be a graphic designer, gas worker, plumber, hairdresser, therapist or in any other industry that you will incur costs as a result of running your own business. Some of the costs incurred could be claimed as business expenses but do you know what you can be claiming for?

As a sole trader, you will be taxed on the profits of your business and the profits are simply your income less your expenses after deduction of your personal allowances.

Claiming an expense is straightforward and all you need to do is retain all your expenses receipts for the year. The receipts can then be then included within your self-assessment tax return but remember all expenses that are incurred need to be exclusively for the use of your business and in order for them to be considered the tax-deductible expense.

You must also retain your business records for 7 years.

What is a tax-deductible expense?

  • cost of goods bought for resale (stock)
  • equipment costs (including hire of equipment)
  • repairs and consumables
  • advertising and marketing
  • delivery charges
  • workwear
  • use of your home as an office
  • rent of business premises, light and heat utilities on business accounts
  • staff or subcontractors costs
  • insurance
  • postage and stationary
  • relevant books and magazines
  • bank charges
  • telephone use
  • travel such as parking, train and bus fares
  • bank charges on business accounts
  • subscriptions and memberships of professional bodies

We would suggest to sole traders to look at using and accounting system and if you want to do this yourself look at using Quickbooks for the self-employed. Quickbooks is HMRC recognised and is available to work with Making Tax Digital. The benefits of using QuickBooks and for minimal charge month is

  • HMRC recognised
  • Making tax digital
  • you can take control of your own cash flow and be able to view how your business is doing
  • send quotes and invoices on the go and receive faster payments
  • expenses can be automatically categorised
  • snap and sort receipts
  • connect multiple bank accounts
  • separate business and personal transactions
  • estimations on income tax payments
  • App as well as computer-based
  • Manage VAT
  • payroll is available as your business grows
  • fast set up

For more information visit