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Sole trader: Can I claim for pre-trading expenses?

It’s quite likely that as a new business owner, you’ll need to buy things prior to trading such as:

·      Stock

·      Maybe a website

·      Advertising

·      Hardware/ software

·      Etc, etc…

These are known as ‘pre-trading expenses’.

So, can I claim for pre-trading expenses?

In short, the answer is yes.  HOWEVER, this is assuming that 2 rules are met:

1.      The expenses were incurred within 7 years of you starting to trade.

2.      The expenses would have been allowable under normal rules.


If both of the above are met, then you can include the expenses at the 1st day you start to trade.

The 2nd rule above might need some explaining. For example, if you spent some money entertaining potential clients, these costs wouldn’t normally be allowable. Therefore, they wouldn’t be allowable as pre-trading expenses either.


Some expenses might not be deductible against your profits initially. This is because they are ‘capital’ expenses such as equipment or perhaps a vehicle. Capital expenses are claimed over a period of time, so they will still reduce your taxable profits.

What about items that I already own & want to use in my own business?

This is assuming that the 2 rules mentioned above are met. Then yes, you can generally get tax relief on things that you bring to use in your business.

The way you get tax relief will vary depending on where you put it on your tax return and whether you get all the tax relief in the 1st year.

If you do decide to bring something that you already own into your business, then the general rule is that you must use the current value of the item. Therefore, if you purchased a laptop for  £1,500 , but it’s only worth £300 now, then you must use the current value NOT what you paid for it.

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