HMRC have introduced a new method for calculating some key business expenses for Sole Traders and Partnerships. They are called flat rate expenses schemes. When we start completing your tax returns in April and May 2014 – never leaving it to the last minute – we will compare the two methods to determine which will save you the most tax. Perhaps HMRC will introduce a broader coverage of expenses at a later date. Currently the scheme is quite limited and most sole traders are already used to claiming 45p per mile for business mileage (which is part of the new scheme). This scheme does not apply to Limited Companies.
You will need to record the following to use the flat rates:
- your business miles for vehicles
- hours you work at home
- how many people live at your business premises over the year
You can use flat rates for any or all of these expenses:
- business costs for vehicles
- business use of your home
- private use of business premises as a home
All other expenses you have to calculate in the usual way.
Look at your expenses for last year then click Simplified Expenses Checker and you can see if you would have reduced your tax bill.