Below is a list of expenses you can claim as a sole trader or partnership.
There are different rules for limited company which are listed here.
Direct costs
This relates to materials directly related to sales. For example, if you were building a house, the direct costs would be the bricks, cement, windows, etc required.
Subcontractors
These are people you pay to complete a particular task - they aren't employees. If you pay someone to help you complete a particular section of work they would be classed as a subcontractor.
You will need to register for CIS if you pay subcontractors within the construction industry, click here for details.
Wages
Employee costs include: wages, pension contributions & employee benefits.
Premises
Rent, business rates, gas, electric, water, cleaning, parking spaces, storage unit
Use of home
A percentage of your home costs can be claimed based on the area in your house you use and what percentage you use your property for business/personal. Home costs include:
Mortgage interest (not the capital element)
Rates (council tax & water)
Utilities (gas & electric)
Repairs & cleaning bills
We would suggest not claiming for any structural changes to your property (e.g. garden office, extension) as this can lead to capital gains tax issues when you come to sell your property.
Insurance
We would suggest taking out either public liability and/or professional indemnity insurance to cover your business. If you have employees you are required by law to get employers' liability insurance. You may not need employers' liability insurance if you only employ a family member or someone who is based abroad).
Public liability insurance protects against claims of personal injury or property damage that a third party suffers (or claims to have suffered) as a result of your business activities.
Professional indemnity insurance (also known as professional liability insurance) helps protect professional advice and service providing businesses from bearing the full cost of defending against a negligence claim made by a client.
Employers' liability insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you.
Our governing body offers us a discount with Hiscox so we use them - if you have a governing body, it’s worth checking with them to see if there is a provider they recommend. We’d also suggest getting a quote from a comparison website such as Money Super Market, Confused.com or Compare The Market.
Software & IT costs
Laptop, desktop, tablet, mouse, keyboard, printer
Bookkeeping software (Quickbooks/Xero)
Telephone
If you have a premises you can claim for the full cost of the office phone there or if you work from home, a percentage of your landline.
You can also claim for a proportion of your personal mobile phone costs.
Postage, printing and stationery
Postage: Stamps, envelopes, sellotape
Printing: Printer, paper, ink
Stationery: Pens, pads, paper clips, highlighters
Advertising
Digital ads: Google/Facebook, TV, radio, magazine, newspaper
Physical: Leaflets, billboards, business cards
Other: Networking events, sponsorship
Website
Domain name - our domain name is millwardmay.co.uk. There is usually an annual payment required to keep your website address.
Web hosting provider - provides the technologies and services needed for the website to be viewed on the internet.
Web designer - paying someone to build your website.
Travel & subsistence
Travel and subsistence can be claimed when your trade is an itinerant trade (which means you move around from place to place). If there is a pattern to your travelling then no travel/subsistence is claimable.
Travel: Trains, buses, aeroplanes, taxis, etc
Subsistence: You can claim a reasonable food expense when travelling and keep receipts or you can pay benchmark rates set by HMRC that can be found here.
Car/Van expenses
Costs v Mileage (can’t claim mileage if turnover is over VAT threshold)
Waste disposal
Removing, destroying or storing damaged, used or other unwanted products and/or substances.
Small tools & equipment
A carpenter could claim for a saw, chisel & tape measures for example.
Protective clothing
Safety boots, helmets, goggles, high visibility jackets, ear defenders or any other equipment designed to protect the wearer's body from injury.
Books & journals
Books/journals - the publication must be business specific and not for self-interest. If you buy a work-related book just to broaden your background knowledge, you’re unlikely to be allowed to claim tax relief on the expense.
Accountancy
You can claim for all fees that relate to producing the accounts and business advisory services. You aren't able to claim for fees that relate to personal tax.
Membership & subscriptions
Subscriptions to professional bodies can be claimed.
Bank charges & credit card costs
Bank charges - monthly fees, specific transaction fees (including foreign currency), exceeding overdraft fees, interest.
Credit card costs - monthly fees, late payment fees, foreign currency fees, interest.
Finance costs
Loan interest, hire purchase costs
Fixed assets
Fixtures & fittings, plant & machinery, motor vehicles and computer equipment.
Common mistakes
Unfortunately, you can’t claim for the following expenses:
Personal clothing (e.g. suits/ties) that isn't protective or branded
Spectacles
Physiotherapy costs
Training - only CPD (continual professional development) may be claimed but new skills are not claimable.