If you’re a sole trader in the UK, you know that tax season can feel like a real headache.
Between trying to keep on top of your invoices, receipts, and the endless forms from HMRC, it’s easy to feel overwhelmed.
But here’s the good news: there are some straightforward and legal ways to reduce your tax bill as a sole trader, so you keep more of your hard-earned money in your pocket.
Let’s break down some of the most effective tax-saving tips to help you stay one step ahead.
Claim All Allowable Business Expenses
One of the easiest ways to reduce your tax bill is to claim all your allowable business expenses.
These are the everyday running costs of your business, the stuff you pay for to keep things going.
These get deducted from your profits before HMRC works out how much tax you owe.
Think things like:
- Office supplies and stationery
- Phone and internet bills
- Travel costs for business purposes
- Marketing and advertising
- Professional fees, like accountants or bookkeepers
Make sure you keep all receipts and invoices to back up your claims if HMRC ever asks.
Make the Most of Capital Allowances
When you buy larger items for your business like equipment, tools, computers, or machinery you can claim capital allowances.
This means you can deduct the cost of these purchases from your taxable profits.
One of the most common types is the Annual Investment Allowance (AIA), which currently lets you deduct up to £1 million a year on qualifying assets.
It’s a great way to reduce your tax bill if you’re investing in growing your business.
However, cars have different rules and usually don’t qualify for AIA.
Instead, they get what’s called a writing down allowance, spreading the relief over a few years.
Again, it’s important to make sure you keep all receipts and invoices.
At Legacy Figures Accountancy, we specialise in managing your business finances with you.
Want to learn more? Let’s have a chat.
Work From Home? Don’t Forget Home Office Expenses
If you work from home, even just part time, you can claim a portion of your household costs as a business expense.
This might include heating, electricity, rent, or mortgage interest, and even broadband if you use it for work.
You can either:
- Use the simplified expenses method, where HMRC gives you a flat rate based on how many hours you work from home.
- Or, calculate the actual proportion of your bills that relate to your business use.
Either way, it can make a real difference to your self-assessment tax return UK.
Keep Accurate Records
This might sound obvious, but it’s one of the most common mistakes we see.
Poor record-keeping can lead to missed expenses, errors in your tax return, and even penalties from HMRC.
Investing in bookkeeping for sole traders, whether it’s software, spreadsheets, or working with a professional, can save you a ton of stress.
Plus, it makes it easier to spot trends in your income and expenses that could help you plan ahead.
Pay Into a Pension
Did you know that contributing to a pension can reduce your tax bill?
Pension contributions qualify for tax relief, which means HMRC effectively gives you back some of the tax you’ve already paid.
Not only are you saving for your future, but you’re also lowering your tax bill today.
Final Thoughts: Make Tax Work for You
Tax might feel like a burden, but it doesn’t have to be overwhelming.
With a bit of planning and maybe a helping hand, you can claim what you’re entitled to and keep more money in your business.
At Legacy Figures Accountancy, we specialise in helping sole traders just like you navigate the complexities of tax.
Ready to make your tax bill feel a little less painful?
👉 Get in touch today for a friendly, no-obligation chat.
