Sole Trader Expenses

(2 minutes to read)

One of the biggest advantages to working as a sole trader is that you are able to claim back on work expenses. Here we discuss what counts as an eligible expense.

Claiming expenses

As a sole trader, you will pay out for various costs that are needed in order for you to carry out work.

A benefit of self-employment is that you are able to claim back on these expenses and therefore reduce your tax bill at the end of each year.

Obviously, you won’t be able to just claim back on anything and everything, you will need to ensure that each purchase you wish to claim for has been made ‘wholly and exclusively’ for business purposes.

Can all self-employed workers claim the same expenses?

There will be some expenses that all self-employed workers will be entitled to, however, there are some areas that are specific to the type of contractor.

For example, a limited company contractor will have certain running costs that other contractors won’t have to consider, plus they will have additional expenses due to employing their own staff.

An umbrella company contractor is generally unable to claim for expenses due to the fact that they are treated as an employee. However, there may be some situations where it might be considered – such as mileage/travel costs if they’re asked to travel away from a usual place of work by their client.

There is of course the IR35 legislation to take into consideration too – for example, a sole trader who falls ‘inside’ IR35 won’t be entitled to the same benefits as someone who falls ‘outside’.

For more information on this, visit our page IR35 and Sole Traders.

What expenses can a sole trader claim?

As a sole trader working outside of IR35, typical allowable expenses include:

  • Travel costs – such as fuel, parking, hire charges, train/bus/taxi/air fares, accommodation while away for business reasons.
  • Office costs – such as stationary, printer ink/cartridges, postage, phone/mobile/internet bills.
  • Clothing expenses – should you require specific protective wear, a uniform or costume.
  • Financial costs – such as hiring an accountant.
  • Training courses – they must be related to your current line of work to help improve your skills and knowledge.
  • If you work from home, you may be able to claim a proportion of costs for your heating, electricity, Council tax, mortgage interest/rent and internet/telephone use.

What are simplified expenses?

As a sole trader, you have the option to use simplified expenses – this involves calculating some of your expenses using flat rates instead of working it all out individually.

This flat rate method can be used for business costs for some vehicles (cars used for non-commercial use, motorcycles and goods vehicles such as vans), working from home and living in your business premises.

How do you claim for an expense?

All expenses will need to be added to your self-assessment tax return.

Although you don’t need to send proof of your expenses to HMRC, it’s definitely worth keeping records of all business costs should you be asked to provide them at a later date.

If you’d like to sign up or need any further information, please call one our friendly experts on 01442 795 100 or email Jaime at jaime.thorpe@dolanaccountancy.com.

You may also like to read

How to set up as a Sole Trader

What is a sole trader? As a sole trader, you are self-employed and run your own business as an individual, keeping ...

Read More

Business asset disposal relief explained

In the latest UK Budget, Chancellor Rishi Sunak unveiled changes to entrepreneurs’ relief (ER) which came into effect from 6 ...

Read More

IR35 and Sole Traders

What is IR35? IR35 is a legislation aimed at putting a stop to ‘disguised employees’ – preventing workers from benefitting from ...

Read More

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

dav1