What side-business tax expenses can I claim?
Sole traders can claim for a wide variety of legitimate costs they pay to start and run their business. These are called “allowable expenses”. If you use something for your side-business and personal reasons, such as your mobile phone, you can only claim for the business-cost proportion. Allowable expenses can include…
If you take on premises to operate your side-business, you may be able to claim for rent, heating, lighting, water, business rates, phone and broadband.
Share of domestic bills
If you run your side-business from home, you may be able to claim a proportion of your heating, electricity and water costs, Council Tax, mortgage interest or rent, broadband and telephone use. If working out exact costs is too complicated, you can claim flat-rate simplified expenses for working from home.
You can claim for business-related fuel, parking, train or bus fares, but you can’t claim allowable expenses for journeys to and from your normal place of work, that’s classed as your commute. Should you prefer, you can claim flat-rate simplified expenses for vehicle use.
Raw materials or stock, printing, packaging, postage, office stationery, advertising and marketing, insurance and bank charges, training and professional membership fees.
You cannot claim for entertaining customers or travel costs to and from your normal place of work. Neither can you claim for parking and speeding fines, a business suit, food or alcohol (unless you have be away from home overnight on business,for example, if you went to a trade show, in which case you can claim for sustenance).
If you use “traditional accounting” methods (ie you record income and expenses by the date you invoiced or were invoiced), you claim capital allowances after buying equipment, machinery or a vehicle for your side-business. If you use “cash basis accounting” (ie you only record income and costs in your accounts when you are paid or pay money out) and buy a car, you can claim this as a capital allowance, but everything else must be claimed as an allowable expense.