HMRC has appreciated that it may be time consuming to calculate sole trader expenses accurately. HMRC therefore offer ways to help.

Annual Tax-free Allowances

You can choose to claim HMRC tax free allowances rather than actual costs, against property income, and/or trading income.

• Trading Allowance –£1,000, as a deduction from total trading income, as long as none of that income is from your employer.
• Property Allowance – £1,000, as a deduction from total property income, as long as none of that income is from your employer. Or as an exemption from reporting gross property income below £1,000.
• Rent a room relief – £7,500 as a deduction from income from letting out furnished rooms in your own home. Or as an exemption from reporting gross income below £7,500.

HMRC Simplified Expenses

You can choose to claim HMRC simplified expenses rather than actual costs as follows:-

1. Mileage for your car at 45 pence per mile for first 10,000 miles and 25pence per mile thereafter.
2. Mileage for your motorcycle at 24pence per mileUse of home based on hours working at home

• 25 to 50 hours per month – £10 per month
• 50 to 100 hours per month – £18 per month
• Over 100 hours per month – £26 per month