If you’re self-employed, your business will rack up various running costs throughout 2021/22. Some of those you’re able to deduct as allowable expenses. By deducting these allowable expenses as part of calculating your business’s taxable profits, it’s possible for us use Business Expenses and Allowances to reduce your income tax bill in the process.
For example, if your business has turnover of £50,000 in 2021/22, and you have £15,000 in allowable expenses, your taxable profit will be £35,000. This is what you will pay tax on.
Money you take from your business to pay for private purchases, however, does not count as an allowable expense and cannot be deducted against your business’s profit.
Allowable expenses are available to sole traders and business partners who are registered as self-employed. At the most recent count in April 2021, the UK’s self-employed population stood at around 4.16 million.
With an increasing number of the UK population getting COVID-19 vaccines and life slowly returning to normal, what can you claim in allowable expenses in 2021/22?
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.