#Managing Expenses as a Self-Employed Tradesman: A Complete Guide

As a self-employed tradesman, keeping track of your business expenses is crucial for accurate tax returns and maximising your allowable deductions. This guide will help you understand what expenses you can claim, how to track them, and best practices for expense management.

#What Expenses Can You Claim?

As a self-employed tradesman in the UK, you can claim expenses that are "wholly and exclusively" for business purposes. Here are the main categories:

#Vehicle and Travel Expenses

• Fuel costs for business travel
• Vehicle insurance and road tax (proportionate to business use)
• Vehicle maintenance and repairs
• Parking and toll charges
• Public transport for business trips

Important: You can't claim for travel between home and your regular place of work, but you can claim for travel to different job sites.

#Tools and Equipment

• Hand tools and power tools
• Safety equipment (hard hats, safety boots, etc.)
• Work clothing (if branded or protective)
• Equipment maintenance and repairs
• Tool storage (toolboxes, van storage systems)

#Materials and Supplies

• Building materials
• Electrical components
• Plumbing supplies
• Paint and decorating materials
• Any materials directly used in jobs

#Business Premises

• Rent for workshops or storage units
• Business rates
• Utilities (if used exclusively for business)
• Insurance for business premises

#Home Office Expenses

If you work from home, you can claim a proportion of:

• Rent or mortgage interest (not capital repayment)
• Council tax
• Utilities (gas, electricity, water)
• Internet and phone bills

You can use either:

• Simplified method: £6 per week (no receipts needed)
• Actual costs method: Proportion based on space used and time spent working from home

#Professional Services

• Accountant fees
• Legal fees for business matters
• Professional subscriptions
• Training courses related to your trade
• Trade association memberships

#Marketing and Advertising

• Website costs
• Business cards and flyers
• Online advertising
• Vehicle signage
• Trade directory listings

#Insurance

• Public liability insurance
• Professional indemnity insurance
• Tool insurance
• Van insurance (business portion)

#Phone and Internet

• Business phone bills
• Mobile phone (if used primarily for business)
• Internet costs (business portion)

#How to Track Your Expenses

#1. Keep All Receipts

Save every receipt for business expenses. HMRC can ask to see receipts for up to 6 years after the tax year ends. Use a receipt scanner app or take photos of receipts immediately.

#2. Record Expenses Regularly

Don't leave it until tax season. Record expenses weekly or monthly to avoid missing anything. Use a spreadsheet or expense tracking app.

#3. Separate Business and Personal

Keep business and personal expenses completely separate. Use a dedicated business bank account and business credit card if possible.

#4. Categorise Your Expenses

Organise expenses into categories (materials, travel, tools, etc.) to make tax preparation easier and identify spending patterns.

#5. Note the Business Purpose

For expenses that might seem personal, note why they're business-related. For example, if you buy a coffee while meeting a client, note "client meeting" on the receipt.

#Common Mistakes to Avoid

#1. Claiming Personal Expenses

Only claim expenses that are genuinely for business use. Claiming personal expenses can result in penalties and interest charges.

#2. Not Keeping Receipts

Even small expenses need receipts. Without receipts, you can't claim the expense if HMRC asks for evidence.

#3. Forgetting Small Expenses

Small expenses add up. A £5 parking charge here and a £10 tool there can total hundreds of pounds over a year.

#4. Mixing Business and Personal

If you use your van for both business and personal use, only claim the business proportion. Keep a mileage log to calculate the split accurately.

#5. Not Claiming Everything You're Entitled To

Many tradesmen miss legitimate expenses. Make sure you're claiming everything you're entitled to, including home office expenses and training costs.

#Using Technology to Track Expenses

Modern expense tracking apps can:

• Scan and store receipts automatically
• Categorise expenses
• Generate reports for your accountant
• Track mileage
• Link expenses to specific jobs
• Export data for tax returns

This saves time and ensures you don't miss any expenses.

#VAT on Expenses

If you're VAT-registered, you can reclaim VAT on business expenses. Keep VAT receipts and record the VAT amount separately. You'll need to include this in your VAT return.

#Record Keeping Requirements

HMRC requires you to keep records for:

• Income: All money received from customers
• Expenses: All business costs with receipts
• VAT records: If VAT-registered
• Bank statements: For at least 6 years

#Tips for Better Expense Management

1. Set aside time weekly to record expenses
2. Use a dedicated business account to separate business and personal finances
3. Take photos of receipts immediately after purchase
4. Review expenses monthly to identify patterns and opportunities to save
5. Work with an accountant to ensure you're claiming everything correctly

#Conclusion

Proper expense management is essential for any self-employed tradesman. By tracking expenses accurately, keeping receipts, and claiming everything you're entitled to, you'll reduce your tax bill and have a clearer picture of your business finances.

Start tracking your expenses today - your future self (and your accountant) will thank you!

TradePlanr helps tradesmen track expenses on the go, link them to specific jobs, and generate reports for tax season. Try it free today.