Allowable Business Expenses: Who Qualifies and What You Get
Learn how self-employed individuals can reduce their taxable profit by deducting legitimate business costs.
This scheme allows self-employed people to subtract the costs of running their business from their total income, which can reduce the amount of tax they owe.
Who it's for
This is for anyone who is self-employed and working as a sole trader.
What you get
You can deduct legitimate business costs from your total income. This lowers your taxable profit, meaning you only pay tax on the money you actually made after expenses.
What it costs you
There is no direct fee to use this scheme, but it requires significant organization. You must keep physical or digital receipts for every single expense you claim to ensure you can prove the costs were for business.
The catch to know
The most common mistake is mixing personal and business expenses in the same account. To avoid issues with tax authorities, you must ensure that only costs directly related to your work are claimed, rather than everyday personal spending.
How to apply
- Track all your business-related spending throughout the year.
- Save all receipts and invoices as proof of purchase.
- Calculate your total expenses and subtract them from your total income.
- Report these figures when you complete your tax return.