Tax time can be stressful, but knowing what deductions you can claim can make a big difference to your final tax bill. There are plenty of expenses you might be able to deduct from your income, reducing the amount of tax you owe. Let’s explore some of the most commonly overlooked tax deductions that you don’t want to miss out on.
1. Home Office Expenses
If you work from home, you can claim a portion of your home expenses as a business deduction. This includes costs like rent or mortgage interest, utilities, and even home repairs. The key is to have a dedicated space for work, like a home office.
2. Travel and Mileage
Business-related travel expenses can be deducted, whether it’s a trip to see clients or a run to the office supply store. Keep track of your mileage and other travel costs like train tickets or parking fees. Just remember, commuting to your regular place of work doesn’t count.
3. Office Supplies and Equipment
Items like stationery, printer ink, and other office supplies are deductible. If you’ve purchased equipment like a computer or phone for business use, you can also claim these costs. For more expensive items, you may need to spread the deduction over several years through capital allowances.
4. Professional Fees and Subscriptions
Any fees you pay to maintain your professional status or subscriptions to industry publications can be deducted. This includes memberships to professional bodies and subscriptions to trade magazines.
5. Training and Education
If you take courses to improve your skills related to your current business, you can usually deduct the cost. This could include workshops, online courses, or even relevant books and materials.
6. Marketing and Advertising
Money spent on advertising your business is deductible. This includes costs for things like online ads, printing flyers, or even the cost of building and maintaining a website. Don’t forget about business cards and promotional materials!
7. Bad Debts
If a customer doesn’t pay you and you’ve exhausted all avenues to collect the debt, you may be able to write it off as a bad debt. This reduces your taxable income, helping you save on your tax bill.
8. Bank Fees and Interest
Any fees related to your business bank account, including transaction charges and overdraft fees, are deductible. You can also claim interest on business loans and credit cards, as long as the expenses are solely for business purposes.
9. Insurance
You can deduct the cost of business insurance, including public liability insurance, professional indemnity insurance, and any other relevant coverage. If you’re working from home, a portion of your home insurance may also be deductible.
10. Clothing and Uniforms
If you need specific clothing for your work, such as a uniform or protective gear, you can claim these costs. However, everyday clothes, even if you only wear them for work, are not deductible.
You may want to check out our guide: How to save tax when you’re Self Employed
Final Thoughts
As a sole trader, it’s crucial to take advantage of all the tax deductions available to you. Every deduction you claim can lower your taxable income, potentially saving you a significant amount of money. Keep thorough records and receipts for all your business-related expenses, as they’re essential for accurate reporting and for substantiating your claims if HMRC ever has questions.
If you’re unsure about what you can claim, it’s always a good idea to consult with an accountant. They can help ensure you’re getting all the deductions you’re entitled to and keep you compliant with tax laws.
If you have any questions or need further advice, don’t hesitate to get in touch. We’re here to help you make the most of your tax deductions and keep more of your hard-earned money!