Guide to Expenses for Sole Traders
If you are self-employed as a Sole Trader, you will pay tax on your ‘Taxable Profits’ which will essentially be the value of any sales generated by your business, less ‘Allowable Expenses’.
As a general rule, if an expense has been “wholly and exclusively” incurred for carrying on and earning the profits of your business, it will normally be allowable. Personal expenditure will not be allowable, so it is better to operate a business bank account and keep business and personal expenses separate as much as possible.
HMRC do allow you to get some private benefit from the expenditure and still get tax relief for the amount spent for your business, as long as the private benefit was incidental and not the reason for the expenditure.
This guide tells you about the tax allowances, deductions and reliefs you can get as a self-employed business person.