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What expenses can I put through the business- what is a business expense

Car: you can put all costs of your car into your business. You should keep a mileage record which shows business mileage. If you car does 1000 mile per month in total on average and 100 miles were for business use you can then claim 10% of all car costs – ie 100 /1000 = 10% Car costs can include - repairs/tyres/petrol/road tax.

You can also claim wear and tear of the Market value of your car each year. This is called Capital Allowances- it is allowed at 10 or 20% depending on the car. You can claim 10% of the capital allowances for business use.

Stationery/postage: all stationery pens/paper/ computer toner cartridges used by your business for business use

IT support Website: any costs relating to having a website built / the maintenance and hosting of the site – any ongoing IT support

Telephone:  Both mobile and personal home phone can be claimed. Where the phone is used for business and private use, the private element is not allowed against your business. So keep a rough record of how much is business use. It is good enough to say an approx %.

Training Costs: The cost of initial training is NOT allowable. Ie if you have to train to enable you to start your business this is not allowable against your tax. However any ongoing training, CPD courses etc are fine.

Accountants Fees: All costs you pay to your accountant.

Bank Charges:   negotiate 2 years free banking currently offered by some banks on new Sole trader business accounts. After that all bank charges can be treated as expenses.

Clothing :            Only protective clothing such as hard hats and boots. Any other clothing suits etc are not allowed.

Insurance:           Liability insurance- income protection insurance

Home Use:         you may use some of the house for business use. Make sure that you DO NOT dedicate one room for business or you may have to pay Tax on a business asset if you sell your house.  AS long as you use the room for some other purpose at any time during the week then you will not have to pay business tax. Ie use of a study for business Mon – Friday but the kids may use at the weekend to play games on the PC...

To calculate home use take:

Mortgage INTEREST only (not the capital)

Building Insurance

Contents Insurance

General Rates

Water Rates

Add these together. Calculate what % of the house you use for business and for how long ie £10,000 costs 20% of house used for 12 hours a day = £1000 allowable against your profits

What is NOT allowed to claim against my income

Entertaining: Where you take clients out for a meal or buy contacts coffees or any Food Beverage or cigarettes/ (this includes the bottles of wine at Xmas) these can be shown as a business expense but they will not be allowed against your tax. Effectively you pay for these expenses with no tax relief so be careful how much you spend.

NB: Entertaining Staff: If you have staff then this cost is allowable against your taxes.

                Any gift to a client which is Food, Drink, alchohol or tobacco. All these will be disallowed against your profits and you will pay tax on them.