Reduce Your Self Assessment Tax Bill: Claimable Expenses for Sole Traders and Self-Employed Business Owners
As a sole trader or self-employed business owner, it’s essential to understand what expenses you can claim to reduce your Self Assessment tax bill. While this may seem daunting, knowing which expenses are eligible can save you a significant amount of money.
Expenses You Can Claim
There is a long list of company expenses that you can claim tax reimbursement on. Unfortunately, many business owners and sole traders are unaware of these claimable expenses. Here are some examples:
- Office equipment or tools: Laptops, desktop computers, printers, and software (used for less than two years)
- Stationery: Paper, pens, pencils, stamps, envelopes, printer ink, and cartridges
- Communications: Equipment used for electronic communications, such as telephones and mobile handsets
- Phone and internet: Phone and internet bills, divided reasonably for personal and business use
- Professional and financial services: Accountants, lawyers, surveyors, architects, etc.
- Business bank account charges: Bank, overdraft, and credit card charges, interest on business loans
- Pension contributions: Eligible for tax relief
- Travel: Travel and accommodation exclusively for business purposes
- Staff and employee costs: Salaries, benefits, pensions, bonuses, agency fees, employer National Insurance contributions
- Car and vehicle costs: Gas, insurance, repairs, mileage allowance, parking, and hire charges
- Food and clothing: Uniforms, entertainment costumes, laundry fees, business-related food purchases
- Marketing and advertising: Website hosting, maintenance, professional journal or trade organization memberships
- Materials: Items for resale, raw materials, direct costs associated with producing goods
Additional Expenses for Those Working from Home
If you run your business from home, you can also claim the following additional expenses:
- Heating bills
- Electricity bills
- Council tax
- Mortgage interest rates
However, since your home is primarily for personal use, you can only claim a portion of these costs. Divide them based on the amount used for business purposes, such as hours worked at home and rooms used for business.
Tracking Expenses Throughout the Year
To accurately report your figures on your Self-Assessment tax return, it’s crucial to track your expenses throughout the year. Consider using dedicated accounting software or hiring a professional to ensure everything is in order. Starting from April 2026, digital copies of expenses will be legally required for small business owners making over £50,000 per year due to the Making Tax Digital mandate.
How to Claim Your Expenses
After determining your claimable expenses and calculating the amount you’re entitled to, the next step is to make your claim against your tax bill during your Self-Assessment tax return submission. On the HMRC website, under the “Self-employment” section, fill out your income figures and provide detailed figures for various expenses. You can either submit a total amount or provide a breakdown.
Final Thoughts
Understanding your claimable expenses and their impact on your tax bill can greatly benefit your cash flow. By familiarizing yourself with the process, the end of the tax year will be less stressful. If you still find the self-assessment process overwhelming, consider hiring an accountant or investing in effective accounting software like Sage Accounting to streamline your finances and expenses.
