Claiming expenses as a sole trader

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Claiming expenses as a sole trader

If you’re considering embarking on a new career as a sole trader, or if you’re about to launch a start-up as a sideline to your existing occupation, you might be apprehensive with regard to how taxes and expenses work.

As a sole trader, your company won’t be classed as a separate legal entity from you as a person. While there are benefits to setting up as a sole trader (it’s a lot easier than incorporating a company for example), it might not be the right path for you, depending on the industry you operate in and the services you provide. For further information, why not seek some start-up advice?

What expenses can I claim as a sole trader?

It is possible to claim tax relief on certain business expenses, provided they are permitted by HMRC. Tax relief on expenses can be used to offset any taxable profits when your self-assessment tax return is filed with HMRC.

Some of the things you can claim tax relief on are obvious – for example if you require protective clothing or a uniform during your duties. Despite this, if your work clothing can also be used as everyday wear, HMRC might not deem it to be a sufficiently taxable expense.

Travel expenses can also be claimed if you use a vehicle for work. However, if your vehicle is used for both personal and work use, you’ll only be eligible to claim for elements that allow you to function in your job. Travel between home and your place of work (be it an office or a client’s property) is not eligible for tax relief – and if you find yourself in the unenviable position of being issued with a parking or speeding ticket, you won’t be able to claim back on those either.

What if I work from home?

With increasing numbers of us working from home, the lines between expenses and everyday purchases have become somewhat confusing. To ensure any claims for tax relief are legitimate, and to avoid these claims being rejected by HMRC, the best practice is to employ the services of an accountant who specialises in working with sole traders.

SQK Accountancy offer personal tax accountancy in Manchester, which can help save you time and money, and also reduce the stress associated sole trader accounting. To find out about our inclusive packages, or to request advice regarding sole trader expenses, please feel free to contact our team today.

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