Working as a contractor will mean that you are able to have a lot more freedom, control and flexibility; there’s also the opportunity to potentially earn more than if you were in the same role but in a permanent position.
One of the main benefits of being self-employed is that you are able to claim back on a wide range of expenses, which in turn will reduce your tax bill at the end of the year.
When it comes to expenses, the key rule is that it must be wholly and exclusively for the running of your business.
It is also important to be aware that with any expenses you wish to claim, you will need to keep hold of receipts for proof of these purchases, for a minimum of 6 years.
At the end of each tax year you will need to add up all of your allowable expenses and factor them into your accounts and tax return.
Here we take a look at some of the most common types of contractor expenses:
Office items, equipment and property
Office items that you are able to claim back on includes:
- Company mobile phone bills
- Printer ink and cartridges
- Computer software
If you rent out a property for your business, examples of what you can claim back on includes:
- Utility bills
- Property insurance
If you do use your home as an office, then you are able to claim back a use of home allowance, to cover some of the costs. The allowance is currently set at £4 per week, or £18 per month.