Claiming expenses can be a confusing part of your business, especially when you first start up as a Sole Trader. Our aim is to support our clients and ensure that they know what expenses they are entitled to claim for. Here are our top 3 forgotten expenses, which most Sole Traders don’t think of when first starting out:
If you wear a uniform for work, or need protective equipment then these are classed as an allowable expense. For example if you need to wear steel-toe capped boots for safety reasons, then this would be classed as an allowable business expense.
Regular day to day clothing, even if you solely only wear the items for work purposes cannot be classed as a business expense, this is because you could wear them at other times which are not for business purposes. An example of this would be buying a suit to attend a client meeting, this could also be worn to attend a wedding or other occasion and therefore cannot be classed a sole business expense.
The only way around this clothing scenario is branded clothing as this is counted as an advertisement of your business. Branded clothing is a great way to get your brand known when you’re out and about and your clients will also see that you are investing in your business.
If you have use of a car for business related reasons then you are entitled to claim mileage costs. You can do this by claiming the actual costs incurred or by using the ‘flat rate’ method for mileage expenses. By using the ‘flat rate’ method you can claim 45p per mile for the first 10,000 miles. Anything exceeding 10,000 miles you can claim 25p per mile. For example if you travel 11,000 miles for business then you can claim 45p for 10,000 of these miles, for the remaining 1,000 miles you can claim 25p per mile. You must keep a record of the trips which you make.
As well as business mileage you are also entitled to claim other travel expenses such as train fare.
Use of home
Many Sole Traders start off building their businesses from home and since the Coronavirus outbreak then this is even more common to remain based from home. If you work from home you are entitled to ‘simplified expenses’. This is a way of calculating your business expenses using a flat rate so that you don’t have to work out the exact cost. You are only entitled to do this if you work 25 hours per month or more.
For utilities you are entitled to claim £10 per month if you work between 25 and 50 hours per month from home, £18 between 51 and 100 hours per month and £26 for hours over 101 per month. This method does not include phone bills or the cost of your Wifi.
You can find out if simplified expenses can save you money by using this tool.
Alternatively you can claim for the actual costs as a percentage of how many rooms you use for business purposes and for how many days each month.
For advice on what you can and can’t claim for please get in touch.