That dreaded January 31^st self-assessment deadline is approaching fast – but stop worrying! There’s nothing to fear. Your friendly self-assessment expert at Mad Hatters is at hand. All you need to do is pick up the phone and we’ll get you started, Today’ blog is a quick-and-easy way to get you kick-started.

As a sole trader, your business will, of course, incur running costs. The good news is that many of these can be claimed as business expenses – you’ll pay less tax and get to keep more of your hard-earned money.

The trouble is – the list of what you can and can’t claim for is always changing.

So – in this article, we’ll touch on a handful of the expenses you can claim.

And by the way – next month’s blog will be about the expenses you can claim as a Limited Company.

What is tax relief?

Every business expense you incur reduces your profit. So, more allowable expenses means less taxable profit and less tax to pay.

To account for your expenses properly, you need to keep accurate records of everything. Remember – by law, you have to keep these records for six years. HMRC could decide to investigate at any point within this time.

There are many grey areas about what is ‘allowable’ and what isn’t. This’s why, if you’re in any doubt, you should always check with a tax expert (could that be us? 😊)

So then – which expenses can I claim for?

You can only claim for expenses which you ‘wholly and exclusively’ incur in the performance of your duties.

When a particular expense has both personal and business elements, it often won’t be accepted, because you’d still be making the expense regardless of the business. There are exceptions. For example, if you work from home, you can claim for a proportion of heating and lighting expenses, for the room you actually work in.

How do I keep track of my business expenses?

It’s vital to keep a record of your expenses such as business mileage. Without the breakdown of journeys and mileage covered, HMRC could refuse your claim.

You can use a spreadsheet for this kind of record-keeping. But, these days, there are some amazing apps around for keeping expenses records. Call us and we’ll point towards the best ones.

Food

If you’re working away, you can claim lunch costs if you work for five working hours. More than 10 hours, you can claim for dinner too.

Accommodation

You can claim on accommodation used when you’re travelling for business. But be reasonable. If HMRC sees that you’ve been staying at the Savoy, they might well query your claim!

Business mileage for sole traders

If you use your personal vehicle for business travel to a temporary work location you can claim the following rates –

Make sure you keep up with a mileage log or again – there are some great apps you can use.

Fixed assets – equipment and office furnishings

This could be computers, printers, and software. You can also claim relief towards the cost of equipping/furnishing a business office, e.g. chairs, bookcases. Essentially, for anything you buy that you need for your business, you can claim tax relief.

Everyday office purchases

You can claim for all those little everyday purchases – from paperclips to computer consumables.

Professional subscriptions

If you pay to belong to professional bodies or associations, you can claim.

Telephone and broadband expenses for sole traders

If you’re using a home or mobile phone line for both business and personal calls you can’t claim for line rental, because they aren’t exclusively for your business.

But – you can claim expenses for the business phone calls used on that line, provided you can identify them on the phone bill.

The same applies with Broadband.

Using your home as an office

If you work from home you can calculate your allowable home expenses.

This gets a bit complicated. You can choose to claim what’s called ‘simplified expenses for the self-employed’ or you can work out your actual costs. You do this by calculating the proportion of personal and business use for your home – in other words, how much of your utility bills are for business. Call us – we’ll help you to decide the best approach.

Training expenses for sole traders

The cost of any work-related training courses is claimable. Interestingly, you can’t claim if the training is designed to give you a new skill enabling you to branch out into new sectors or offer a new service.

Travel and subsistence expenses for sole traders

You can claim for travel expenses as long as it’s purely for business. This could be airfares, train tickets and ferries. Tolls, congestion charges, and parking fees are all allowable too. But – regular commuting doesn’t count.

Of course, you can claim for the cost of hotel rooms and meals on overnight business trips.

We’re specialists in tax for solo professionals

We’ve listed here just a handful of ways in which you should be saving money and claiming tax relief. Here at Mad Hatters Accountants, we’re tax experts.  We know our tax stuff. We’re perfectly placed to guide you through the maze of tax claims. All it takes to give you peace of mind is to pick up the phone.  We’ll be delighted to hold a no-obligation conversation and talk you through the process.

Call us on 01908 448150
Or
Send us an email.

Remember – we’re here to help

Being a solo professional or even an SME can be a lonely business, particularly when you’re starting off. You often find yourself immersed, beavering away in your tiny bubble, often oblivious to the outside world. In the early days of your business, this is perfectly natural. After all, there’s so much to do and most of it has to be done by – guess who? You!

Doing it all

In the first year or two, particularly if your start-up capital is limited (and it always is), you’ll find yourself doing everything yourself – your marketing, your sales, your website, scheduling your appointments – even, though we’d never recommend this – doing your accounts and bookkeeping! All this and there’s your actual job of work. I never fail to be impressed at the dedication, enterprise and sheer hard work shown by today’s entrepreneurs.

But – doing-it-all-yourself, though perhaps a cost-saving virtue in the early days of a new business, can become an unhealthy habit. We become used to burning that midnight oil, day after day, week after week. We think that this low-cost way of running a business is the only way forward.

Bad for business and bad for you

Of course, this is a sad delusion. Working hard definitely isn’t the same as working smart. By slaving away every hour of the day and night, our enthusiasm gets worn down, our business passion becomes dulled. We become ground down and demoralised. In the end, we become simply not-very-good at what we do. Doing-it-all-yourself is bad for your business and bad for you.

Outsourcing – When? What? Who?

The truth is that, for our business to grow and succeed, we need to look after ourselves – remain bright-eyed and bushy-tailed eager beavers. We need to keep our focus on what we’re good at, what we love doing. We should leave the rest, the essential drudgery, to the experts. We’re, of course, talking about out-sourcing.

The difficulty with out-sourcing is knowing

• When to outsource?
• What to outsource?
• Who to outsource to?

When?

As soon as you can possibly afford it. Doing everything yourself is an unfortunate necessity in the early days. But, by carrying out every business operation yourself, one thing is certain. You won’t be doing it well. And the result? Your business will suffer. When business starts to come in, try to resist the temptation to reward yourself. Instead, reward your business. Release it from those shackles. Let it breathe. Let it grow. Invest in the expertise of others.

What?

No surprises here. A fully-qualified bookkeeper or accountant! What else did you expect? A knowledgeable accountant will help you in so many areas. Not just the usual accountancy essentials, but a good pro-active accountant will be your business ‘friend’ – an invaluable support and guide in helping you to decide which other parts of your business you should outsource. And here’s the key. Your accountant will also be able to answer the question …

… Who?

It’s unlikely that you’ll be your accountant’s only client. (Maybe, if you find out you are, you should choose again!). They will, of course, be working for all kinds of businesses, maybe in all kinds of sectors. And this is where they will really come into their own. Think about it. All those contacts. All that expertise. And all you have to do is ask. By the very nature of their work, your accountant will be extensively networked. Let’s say that you decide it’s time you had a smart new website. There’s every chance that your accountant will know several web designers and will be able to point you towards the one who would be the best fit for your business.

There’s another dimension to your accountant’s extensive contacts list. As a conscientious accountant, they’ll be aware of many of their clients’ needs and challenges. They may well be able to refer your products or services to one of them.

Spreading the net

We’ve been discussing your accountant’s client list as a form of ‘network’. But this could spread way beyond their client base. These days, most accountants are seasoned networkers. They attend regular meetings, often over breakfast, lunch, or even in the evenings. Your accountant will be attending these events, not so that they can just push their dog-eared business cards into the hands of potential clients. The purpose of a diligent and successful networker is to help themselves by helping others. They’ll be asking people they meet, ‘What can I do to help you?’. They develop a reputation for being a ‘friendly expert’ – someone who it’s good to know.

Get networking!

As part of all this networking activity, they’ll have you in mind – especially if you tell them about your ideal client. Ask them to keep their antennae alert and twitching on your behalf. Better still – get networking yourself. The rewards can be enormous – and it can be fun! Ask your accountant to recommend the best networking groups in your area for your type of business. Focus on using your networking activity to help others and in no time … you’ll be reaping the reward.

So, find yourself a bookkeeper or accountant who will be your financial friend – someone who has your interests at heart, who will proactively work with you – helping with those tricky outsourcing decisions and really set your business on the upward path!

Find out more about using your accountant for networking opportunities. Discover the benefits of our accountancy services. Read also about our friendly, affordable bookkeeping services.

Get in touch today.

Call us – 01908 429294
Or send us an email

We’d love to hear from you.

*Article in The Cut 2017