If you use traditional accounting, claim capital allowances when you buy something you keep to use in your business, for example:
You cannot claim capital allowances if you use your £1,000 tax-free ‘trading allowance’.
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
You can only claim allowable expenses for the business costs.
ExampleYour mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business.
You can claim for £70 of business expenses.
You may be able to claim a proportion of your costs for things like:
You’ll need to find a reasonable method of dividing your costs, for example by the number of rooms you use for business or the amount of time you spend working from home.
Example You have 4 rooms in your home, one of which you use only as an office.
Your electricity bill for the year is £400. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100 as allowable expenses (£400 divided by 4).
If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100 divided by 7).
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for:
November 3rd, 2021
You can only charge VAT if your business is registered for VAT.
VAT is charged on things like:
• business sales - for example when you sell goods and services
• hiring or loaning goods to someone
• selling business assets
• commission
• items sold to staff - for example canteen meals
• business goods used for personal reasons
• ‘non-sales’ like bartering, part-exchange and gifts
November 3rd, 2021
IR35 tax legislation is nothing new. In fact the legislation was introduced in 2000 in order to identify ‘disguised employees’ in businesses.
IR35 rules ensure that off-payroll and on-payroll workers are taxed fairly. This means that if a contractor is working under exactly the same conditions as an employee (effectively a ‘disguised employee’), IR35 regulations ensure that the contractor pays the same tax and national insurance as an employee would.
October 17th, 2021
If you’re a sole trader, you run your own business as an individual and are self-employed.
You can keep all your business’s profits after you’ve paid tax on them. You’re personally responsible for any losses your business makes. You must also follow certain rules on running and naming your business.
