If you are a sole trader builder in the UK, knowing your tax as a sole trader builder is important for you to be able to claim your expenses! Learn more here on this blog.
Sole Trader Builder Tax UK: Top 10 Expenses You Should Claim From Your Tax as a Sole Trader Builder in the UK
You might be surprised at what expenditures you can claim back as a builder. Regardless of whether you are employed via the Construction Industry Scheme (CIS) or Pay as You Earn (PAYE), there is a number of expenses that you can reclaim.
As a sole trader, you can claim some costs from your VAT
If you work in the construction sector, you may be eligible for various tax deductions based on your position. Before you claim, there are two essential principles to remember.
- The money you want to claim must have already been spent.
- The expenses must be proportional to your earnings.
Any claim you make will be invalid if your employer has compensated you for work-related travel, food, lodging, incidentals, flights, public transportation, taxi, or overnight stays. This article illustrates what you can claim as a sole trader builder in the UK.
1. Materials used for your work
In paragraph 13.8.1, articles that are ‘typically’ included in a building (or its site) are listed. This isn’t an exhaustive list. Remember that these items are only considered building materials for VAT purposes if they meet all of the requirements listed in paragraph 13.2. Examples of tax-deductible material for work include air conditioning, bathroom accessories, builders’ hardware, decorating material, and dust extractors, just to name a few.
2. Replacement tools
Because HMRC considers tools purchased for work to be an essential job expense, you can claim the tax returned. This means that the IRS recognizes that you require this equipment to perform your job and that you must pay for them out of your pocket.
3. Repairs & maintenance of equipment
Because HMRC considers tools purchased for work to be an essential job expense, you can claim the tax returned. This means that the internal revenue system recognizes that you require this equipment to perform your job and that you must pay for them out of your pocket. The requirements apply to all mechanics, whether they work for a garage, a franchised dealership, a fast fit center, or are self-employed. As long as you pay income tax for the year in which you are seeking a tax rebate, you are eligible as a part-time or full-time PAYE employee. (See Article 13.5.2)
Health and car insurance are tax-deductible for sole traders or construction workers under the CIS program.
5. Protective clothing such as overalls and work boots
You must use standard rate products that you sell whether you’re a retailer, a builder’s merchant, or supplying goods from stock. There are some exclusions, such as the supply of industrial safety boots and helmets (VAT Notice 701/23) and printed manuals (VAT Notice 701/10). See the VAT guide for a list of commodities that can be supplied at a zero or reduced rate (VAT Notice 700).
6. Laundry & cleaning
You can deduct the expense of washing, drying, and ironing your qualified work clothing, as well as the cost of having them dry-cleaned. You don’t have to give written documentation for your laundry expenses if your overall laundry expenses are $150 or less and your total work-related expenses are $300 or less.
7. Vehicle Cost: fuel (if vehicle used solely for business, please refer to HMRC simplified or actual expense)
A tradies’ income is frequently based on the use of a vehicle. Most construction workers and tradies are aware that they can claim income-related costs; however, certain rules must be followed to ensure that the correct amount is claimed. Your records must stand up to inspection, whether you employ the logbook approach or the cents per kilometer traveled method.
Evidence of a second personal use car is required to claim 100% of your expenses on one vehicle. If you use your car for work, you can deduct a percentage of the expense.
8. Vehicle Cost: repairs & maintenance (if vehicle used solely for business)
As part of a category of car-related expenses, car repairs are tax-deductible. However, only a limited number of people are entitled to a tax deduction for automotive expenses. This comprises entrepreneurs and other self-employed employees.
9. Vehicle Cost: road tax, insurance & MOT (if vehicle used solely for business)
Road tax and MOT are tax-deductible only if you can show evidence of a second car. You can claim road and insurance tax if you use a single car for your travel.
10. Other sundry items
For CIS, this category includes expenses incurred as part of your job that do not fall into one of the other categories, such as phone fees, stationery, and postage.
Here is a list of recently asked questions about the Top 10 Expenses You Should Claim From Your Tax as a Sole Trader Builder in the UK
Does VAT for Tool apply to sole trader builders?
The requirements apply to all mechanics, whether they work for a garage, a franchised dealership, a fast fit center, or are self-employed. As long as you pay income tax for the year in which you are seeking a tax rebate, you are eligible as a part-time or full-time PAYE employee.
When are building supplies zero-rated?
When the contract specifies that any services provided by architects, surveyors, or anyone acting as consultants or supervisors are simply cost components of the contractor’s supply and are not specifically sold to the customer, the entire supply might be classified as zero-rated.
What is the logbook method?
Your logbook records should always be up to date, and a logbook can keep track of your business activities for up to five years. You must keep account of your car usage for 12 weeks, which will be averaged over the year. Work-related usage should also be documented in your logbook.
We hope this article has clarified what expenses you can and cannot claim. Tax is what drives us at Sterlinx Global, and our team is professionals when it comes to maximizing your tax refund. You can also assist us by keeping track of your spending receipts throughout the year and giving us copies of your tax package.