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Top HMRC tax help for sole traders

Robbie Morrison from the HMRC Digital Support for Business and Agents Team offers advice

As an HMRC regional partnering manager, I look to build constructive relationships with businesses. I also seek to increase awareness and use of HMRC’s wide range of digital support products.

We know that most SMEs want to get things right, but may need help. Naturally, we want to assist customers as they face key business challenges, whether it’s starting their business, taking on staff, registering for VAT, exporting, setting up a company, etc. Our digital support products can help. Here are a few ways how, together with basic practical advice about managing tax.

1. Keep thorough records

When you’re starting a business, create a record system that you can work with and update it regularly. This will help you to plan, monitor cash flow and make it easier to pay your tax. There’s plenty of software available to help, as well as free apps.

2. Don’t wait for a deadline

File or submit returns as soon as you can, once you have all the relevant information. That way you will avoid a financial penalty for late submission.

3. Budget effectively

Being self-employed means you’re responsible for your own tax and National Insurance contributions, so it’s important to be disciplined. You can use HMRC’s ready reckoner for assistance. If you run a small business, cash-basis accounting may suit you better than traditional accounting. Find out more about cash basis here.

4. Consider a business bank account

This will save you having to separate personal and business transactions.

5. Correctly identify business expenses

No matter how trivial they are, expenses can mount up. Failure to record a business expense could result in paying more tax than you should. If you’ve been charged for a business bank account, for example, you can claim those costs because they are business-related.

6. Be aware of capital allowances

These allow taxpayers to write-off the cost of certain capital assets against taxable income. It’s important to know what they are and if they apply to you.

7. Working from home

You can claim expenses for some of your costs when working from your home, some or all of the time. For example, if you have a phone for both business and personal use, you can claim for the business use.

8. Improve your knowledge

If you need guidance, perhaps to find out if you need an accountant or have straightforward tax affairs you can handle yourself, various resources are available. HMRC provides helpful videos on YouTube, hosts webinars and has a host of useful e-learning packages, including:

9. Keep up to date with HMRC

Sign up for business advice emails or follow our special Twitter feed @HMRCbusiness.

  • The Digital Support for Business and Agents Team provides digital solutions that help businesses and their agents to meet their obligations to HMRC accurately and on time. A range of solutions can be accessed online and they’re designed around business life events, enabling owners to avoid errors and penalties by paying the correct amounts of tax when due. Products have been designed to meet different learning styles, because people learn in different ways.

Read more:

Managing your cash flow

Related articles:

Dealing with cash flow problems

Next step:

Use our cash flow forecast tool to help you manage your finances