You’re on top of the latest trends, investing in the right equipment and software to deliver top-notch IT services to meet your clients’ needs. Under the changing landscape of technology, independent contractors like you have a lot to juggle. Managing your business expenses and ensuring you claim for them can help keep your tax bill low.
A business expense is a charge you incur as a contractor in the performance of your core service or on behalf of your client. You can claim back such expenses, meaning they can be deducted from your gross profit before tax is applied. Your IR35 status will determine which expenses you are allowed to claim.
What expenses can contractors claim outside IR35?
If your contract falls outside the scope of IR35, you can claim for basic business expenses, such as:
- Costs associated with setting up your company
- Costs associated with an external accountant providing accounting and bookkeeping services
- National Insurance Contribution (NIC) and contributions to a pension plan
- Basic costs of operating a business such as business rent, utilities, internet services, insurance, office costs.
- Costs of entertaining clients or potential clients
What expenses can contractors claim inside IR35?
If your contract falls under the scope of IR35, you can claim a fixed 5% for basic business expenses, such as:
- Costs of using your home as an office
- Administration and secretarial support
- Accountancy and tax advice
- Business development costs
- Printing, postage and stationery
- Training costs
- Certain computer equipment
- Bank and overdraft interest
- Hire purchase payments
Accountants for Contractors
To be a successful self-employed contractor, you need to consider everything from managing your finances to potential tax issues including IR35 legislation. As contractor accountants, Tax Agility is your extra pair of hands, helping you understand what expenses you can or cannot claim. We are here to give you practical, no-nonsense advice and reduce any uncertainties associated with any laws and regulations that apply to those who choose to operate as a contractor.
Need more information? Contact us on 020 8108 0090 today.