Nothing is certain in life except death and taxes. It’s a well-known quote credited to writer, scientist, inventor and US founding father Benjamin Franklin (1706–1790). He was right, of course.
But although paying tax is unavoidable if you want to stay on the straight and narrow, whether you’re a self-employed brickie, spark, chippy, plasterer, plumber or painter, paying too much tax is avoidable. And there could be other ways that you could save more of your hard-earned dough when it comes to tax. Here are seven ways that other tradespeople save money on tax – and they’re all perfectly legit.
1 Employ your other half
Just because you’re a sole trader, doesn’t mean you can’t employ others. Many wives, husbands or partners are employed to look after business admin for their sole trader partner or spouse. It’s perfectly legal to pay your partner or spouse to work for your sole trader business, which reduces your taxable profits and the size of your tax bill. Their wages must be fair and proportionate for the work they do, which must be comparable to how much you would pay someone else to do the same work.
Any additional income could have implications for their tax bill, if they’re already working for someone else. But if their total income is below £12,570 (the standard Personal Allowance), they won’t pay income tax on the money you pay them. Spouses and partners must be paid via payroll, with any necessary tax deductions made, while employer’s National Insurance contributions are payable if an employee earns more than £96 a week (2025/26 tax year).
2 Claim back all of your allowable expenses
Thankfully, sole traders can claim for costs they pay to run their business. These are called allowable expenses. Many sole traders fail to claim all of their allowable expenses – often because they don’t know some are allowable. The net result is their taxable profit is higher, so they pay more tax than necessary.
- For an expense to be classed as allowable, it must be incurred “wholly and exclusively for the purposes of the trade”. If you use your phone for business and personal reasons, you can only claim the proportion of business costs. The same applies to fuel and other expenses.
Visit government website GOV.UK to find out what allowable expenses you can claim. Be sure to have a reliable system for recording your business expenses, so you don’t forget to claim any. And retain sales receipts and invoices for your business costs, because HMRC can ask for proof.
3 Claim for home office expenses
If your other half is going to work for your sole trader business, if possible, they should have a dedicated work space in your home. A spare room is ideal. It could also enable you to take care of certain tasks, such as preparing written quotes. Fortunately, home office costs can also be claimed as allowable expenses, based on how much space is used and for many hours per week. This enables you to claim for a proportion of your domestic bills (eg utilities, insurance, internet, telephone, rent or mortgage interest costs, Council Tax, etc), which leaves you better off.
4 Pay more into your pension
We all need to prepare for our retirement, so we can live as good a life as possible after we hang up our boots. Having enough money to live off is vital, of course. As a self-employed tradesperson, you must set up your own private pension if you want to supplement your State Pension. If you haven’t already done this, speak to a reputable pension adviser. Visit www.unbiased.co.uk to find an FCA-regulated adviser (there’s no charge for this service). Paying more into a pension can help you to pay less tax now, while also being better prepared financially for your retirement.
- After you start paying into your pension, you can claim tax relief on your contributions. You pay tax on your earnings before you make a contribution, but your pension provider claims back at the basic rate of 20%. So, for every £80 you pay into your pension, £100 will go into your pension pot. If you’re paying the 40% higher rate of Income Tax, you’ll get additional tax relief (tax rates and relief are slightly different in Scotland). Visit the GOV.UK website for more information about pension contributions and tax relief.
5 Claim the Marriage Allowance
Marriage Allowance saves an estimated 2.3 million people in the UK about £252 each a year in income tax. It allows a low-earner (whether you or your spouse or civil partner) to transfer £1,260 (10%) of their Personal Allowance to their higher-earning spouse or civil partner, which reduces their income Tax by £252 a year. For this to be worthwhile, the lower-earner’s total income must be below the Personal Allowance threshold (ie £12,570), while the higher-earner must earn between £12,571 and £50,270 (£12,571-£43,662 in Scotland). Visit GOV.UK for more information about Marriage Allowance.
6 Claim additional mileage expenses for passengers
Rather than charge for actual fuel and vehicle-related expenses, HMRC allows sole trader tradespeople to claim mileage allowance, which is a flat-rate scheme that offers a much simpler way of claiming for business journeys made by road.
- Sole traders can claim 45p a business mile travelled in a car/van for the first 10,000 miles and 25p a business mile after that.
- A lesser-known fact is you can claim a further 5p per mile for each additional passenger, as long as they work for your business. For one extra passenger, for example, that’s 45p plus 5p per mile for the first 10,000 miles and 25p plus 5p for each mile travelled over and above 10,000 miles.
- When you’re doing a lot of miles each day and giving lifts to one or two employees, that can really mount up over the course of a year.
7 Complete and file your own self assessment tax return
Some sole traders pay an accountant or bookkeeper to complete and file their self assessment tax return. This can cost a few hundred pounds a year or more. Alternatively, you can do more of your own accounting work, including filing your own self assessment tax return. To make the job quicker and easier, with less chance of mistakes, you could use self assessment tax return-filing software, with subscriptions available for just a fiver a month. That potentially could also offer you a significant saving.
Copyright 2025. Sponsored post by Mike Parkes of GoSimpleTax - tax return software that can help you manage your self assessment.