Do you work from home?
Did you know, as a sole trader you can charge a proportion of household expenses to the business.
The following expenses will need to be logged effectively to best support your books and tax return.
Telephone & Broadband
You should monitor and log the number of calls which are personal, and business related, or log how many hours your broadband is used for business purposes against your broadband / phone’s total usage. Adopting this approach will give you a robust method of apportioning the business / private usage.
General household expenses
Are a harder area to monitor. Furthermore, if you dedicate part of the home to work from, you will need to consider whether there might be a Capital Gains implication should you choose to sell your property in the future.
The simplest method here is to work from home on a non-exclusive basis and charge £4 per week to the business.
It is not just the expenses which accrue whilst working from home that can be expensed (claimed against tax), other business expenses are:
The ongoing hosting costs are tax deductible; however, the actual cost incurred in development is capital expenditure. However, there might be occasions when such expenditure might qualify for R & D credits.
Advertising, PR and marketing
Other advertising, PR and marketing costs are also business expenses, but business entertainment is not tax deductible.
HMRC’s approved mileage rates is easy to claim your travel costs.
Car travel is calculated at 45p per mile for the first 10,000 miles, and then 25 per mile after that threshold has been met. Motorbikes are 24p per mile and bikes are 20p per mile.
Please note, this only applies for business related journeys and not the mileage to and from work.
Business insurance policies
Expenditure on professional indemnity, public liability insurance etc. is a fully allowable as a tax deductible expense.
While courses to keep your skills up to date are tax deductible, retraining and courses to acquire completely new skills, are not.
Fees for other business services
Expenditure on a lawyer or an accountant is sometimes allowable for tax purpose.
For example, in respect of the renewal of a lease or in respect of the preparation of year end accounts support.
However, there can be other occasions when the expense incurred is not eligible to be treated as an immediate tax write off.
For example – legal fees when incurred when acquiring a new lease, or accountants’ costs incurred in the preparation of a personal tax return.
Business related subscriptions
Such as magazines, trade papers. Payment for certain recognised professional organisations etc. are tax deductible.
To best support your tax return, endeavour to keep hard or digitals copies of your receipts. There are numerous apps available which allow you to capture images of your receipts and store for such a purpose. Contact us for more guidance on the complex areas to ensure that you are compliant.