What are the HMRC Detailed tax categories for sole trader transactions?
There are a number of different categories used by HMRC when you file your taxes to help you separate and organise your business finances.
Please be aware that Monzo cannot provide any advice on how to categorise your individual finances, as we are not regulated to provide tax advice. If you are not sure which category to use, please consider contacting HMRC, researching the categories online, or getting professional tax advice.
If you are looking for the tax categories for landlords, please use this article
Here is a list of the tax categories available to sole traders that are not landlords with Monzo and some examples:
Income Categories:
Business earnings
Money you earn from your main work or services.
Examples: customer payments, project income, product sales.
Non-business income
Money you receive that isn't related to your business.
Examples: gifts, personal income, refunds unrelated to your business.
Other business income
Money linked to your business but not from your usual trading activities.
Examples: grants, compensation, tips, selling old equipment.
Tax taken off trading income
Other tax taken off trading income apart from CIS deductions.
Examples:
This is a refund I have received
A refund that your business has received. Please select the category that matches the expense transaction for the refund.
Examples: Refund for returned supplies or a cancelled service
Expense Categories:
Admin costs
Day-to-day office and admin costs that help you run your business.
Examples: Phone, mobile and internet costs, software costs, postage and shipping
Business entertainment costs
Money spent hosting or entertaining clients or customers.
Examples: client meals, hospitality events, taking a customer to a show.
Car, van and travel expenses
Travel or vehicle costs for work trips or running your business on the move.
Examples: fuel for business journeys, train fares, mileage claims.
Cost of goods
Items or materials you buy to sell on or use directly in your work.
Examples: stock, raw materials, supplies.
Depreciation
Adjustments for equipment or vehicles that lose value over time.
Examples: equipment write-downs, selling business tools at a loss
Financial charges
Banking or finance fees for running your business.
Examples: business account fees, credit card charges, payment processing fees.
Interest on loans
Interest you pay on loans or borrowing used for your business.
Examples: loan interest, overdraft interest, equipment finance interest.
Marketing and advertising
Money spent promoting or marketing your business.
Examples: flyers, sponsorship, adverts in magazines/newspapers.
Phone, mobile and internet
Costs for landlines, mobiles and internet for the business
Examples: monthly mobile contract, internet contract payments, business landline costs.
Postage and shipping
Costs for sending business related items via post or shipping
Examples: recorded delivery fees, shipping costs, stamps.
Premises running costs
Costs for keeping your business space running.
Examples: rent, utilities, business insurance.
Professional fees
Payments to experts who support your business.
Examples: accountants, legal advice, consultants.
Repairs and maintenance
Fixing or maintaining equipment, tools or business property.
Examples: repairing machinery, maintaining tools, fixing your workspace.
Software costs
Payments for software that you use for your business.
Examples: software subscriptions, software licence fees.
Staff wages and costs
Payments to employees or people who work for your business.
Examples: salaries, pensions, staff benefits.
Subcontractor payments
Money you pay subcontractors or freelancers to help deliver your work.
Examples: freelance support, tradespeople you hire, CIS subcontractors.
Website costs
Money you pay for your website or online advertising.
Examples: online ads, domain name costs, website building fees.
Other Categories:
Other business expenses
Other costs for running your business that don't fit another category.
Examples: business subscriptions, licences, small one-off purchases.
Personal cost
Money spent on something that wasn’t for your business.
Examples: your home food shopping, medical prescriptions
Paying myself
Payments to yourself from the business.
Examples: Personal funds, reimbursed expenses
Paying taxes
Payments to HMRC from your business.
Examples: Income Tax, National Insurance Contributions
Transfers
Money moving between your business accounts. If you choose this category, it will automatically create a corresponding manual transaction as a Transfer to balance the report to HMRC.
Example: Cash deposited into your Monzo account, payment from an external business account to your Monzo account.
Not relevant to my business
Money moved into or out of the business account that does not relate to your taxable income.
Examples: Mistaken transfer, Income for another business
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