Before we go into the actual expenses list, it’s very important to know which accounting method you use: cash, traditional, or simplified.
Here are the costs you can claim:
Just claim items you’d normally use for less than 2 years as allowable expenses.
You can claim expenses for:
You can claim the equipment as:
You can claim things like:
If you need to use special uniforms, protective gear, or costumes (say, you're an actor), then you can claim these for work.
Of course, you cannot claim everyday clothing (not even a business suit).
You can claim any transport expenses related to your sole trader business:
How you claim depends on how you do your accounting:
You also can’t claim as transport expenses:
You can claim costs for hiring other people (subcontractors).
You can also claim for:
If you’re producing a physical good, you can also claim:
You can claim various fees like accountants (including TaxScouts) and solicitors.
You can also deduct costs for:
There are only a few legal costs that you can't claim:
It’s very important to note that if you’re using cash basis then you can only claim up to £500 in interest and bank fees.
If you’re using traditional accounting, you can claim them as "bad debts" (of course, if you’re sure that you won't recover them in the future - at all).
If you're using cash basis, there's nothing you can do besides taking the matter to court.
You can claim allowable business expenses for any kind of marketing costs:
You can not claim for entertaining clients, suppliers, and customers - so a business lunch might be acceptable, but a night out with a lead is not.
Regardless which method of accounting you use, you must keep records of all your business expenses as proof of your costs. HMRC doesn't need them for your tax return, but you might get asked for them if you ever get audited!
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