Running your own business in T&T means you're wearing every hat. Sales, operations, admin, and yes, taxes. And unlike a PAYE employee whose employer handles the heavy lifting, everything falls on you. The filing, the calculations, the deadlines, all of it.
The good news is it's manageable once you understand how the system works. The bad news is most sole traders either overpay because they miss deductions, or underpay because they don't know what's due. That second one catches up with you fast.
This guide covers everything you need to know to file your 2025 sole trader return correctly.
How Sole Traders Are Taxed in T&T
As a sole trader, you're taxed on your net profit, not your gross income. That distinction matters enormously. Gross income is every dollar that came into the business. Net profit is what's left after you subtract your legitimate business expenses. The IRD taxes the net, not the gross.
On top of income tax, sole traders are subject to two additional levies most employees never deal with:
- Business Levy: 0.6% on your gross annual receipts if they exceed TTD $360,000
- Green Fund Levy: 0.3% on your gross annual receipts, no threshold
Both of these are calculated on gross receipts, not profit. So even if your business had a tough year, these still apply once your income crosses the relevant thresholds.
The income tax rates are the same as for PAYE employees: 25% on chargeable income up to TTD $1,000,000 and 30% on anything above that. You also get the same $90,000 personal allowance.
The Forms You Need
Sole traders file using the 400-ITR (Individual Tax Return). This is a more detailed return than what PAYE employees file, with sections covering:
- Total business income
- Business expenses and deductions
- Schedule E (for employment income if you also had a job during the year)
- Business Levy calculation
- Green Fund Levy calculation
- Any quarterly payments made during the year
If you had both business income and employment income in 2025, everything goes on the one 400-ITR.
Quarterly Tax Payments: Are You Up to Date?
This is where a lot of sole traders get tripped up.
If your estimated annual tax liability exceeds TTD $1,000, you're required to make quarterly tax payments during the year rather than settling the full bill at filing time. The quarters run:
- March 31: first instalment
- June 30: second instalment
- September 30: third instalment
- December 31: fourth instalment
Each payment is based on your estimated tax for the year. If you underpay during the year and owe a large balance at filing, interest and penalties apply.
If you made quarterly payments during 2025, have those records on hand. The amounts get entered on your 400-ITR and credited against your final tax bill. Miss recording them and you'll look like you owe more than you do.
If you didn't make quarterly payments and your liability turns out to exceed $1,000, factor in potential penalties when you file.
What Counts as a Deductible Business Expense
This is the section that saves you the most money. The IRD allows you to deduct expenses that were incurred "wholly and exclusively" in the production of your business income. That phrase is important: personal expenses mixed with business use don't fully qualify.
Common deductible expenses for sole traders:
- Office rent or home office: if you rent a space purely for business, the full cost is deductible. If you work from home, you can deduct a proportion of your household costs based on the space used for business
- Equipment and tools: computers, machinery, professional tools used in the business
- Vehicle expenses: fuel, maintenance, insurance for vehicles used in the business. Keep a mileage log if the vehicle is also used personally
- Telephone and internet: the business-use portion of your phone and internet bills
- Professional fees: accountant fees, legal fees, consulting costs related to the business
- Marketing and advertising: website costs, ads, printed materials, promotional expenses
- Staff costs: if you employ people, salaries and NIS contributions paid on their behalf
- Insurance: business insurance premiums
- Supplies and materials: raw materials, stock, consumables used in delivering your service or product
- Training and professional development: courses and certifications directly relevant to your trade
What doesn't qualify: personal meals, personal clothing (unless it's a uniform or protective gear), personal travel, home entertainment. If the IRD audits your return, these are what they look for.
Wear and Tear Allowances
Equipment, machinery, and vehicles used in your business don't get deducted in one lump sum. Instead, the IRD lets you claim a "wear and tear" allowance each year, which is essentially depreciation on your business assets.
The rates vary by asset type. A few examples:
- Computers and IT equipment: 33.3% per year
- Motor vehicles: 25% per year
- Plant and machinery: typically 10-25% depending on type
- Furniture and fixtures: 10% per year
So if you bought a laptop for $8,000 for your business, you'd claim $2,664 in wear and tear for the year (33.3%) rather than the full $8,000. Keep your purchase receipts. You'll need them.
If you bought an asset in a prior year and have been claiming wear and tear, your current year claim is calculated on the remaining book value, not the original cost.
Schedule E: If You Also Had Employment Income
If you had a job in addition to running your business during 2025, your employment income goes on Schedule E of the 400-ITR. You'll need your TD4 slip from your employer for this section.
The IRD aggregates both income streams to calculate your total chargeable income, then applies your deductions and personal allowance across the whole picture. Make sure both income sources are declared. Omitting employment income when the IRD already has the TD4 on file is a quick way to trigger a review.
Your Profit and Loss Statement
Filing as a sole trader without a Profit and Loss statement is asking for trouble. The P&L is the foundation of your return. It's how you arrive at the net profit figure that goes into your 400-ITR.
Your P&L for the year should show:
- Total business income (all revenue received in 2025)
- Breakdown of expenses by category
- Net profit (income minus expenses)
It doesn't need to be prepared by an accountant, but it needs to be accurate and reconcilable with your bank statements if the IRD asks. If your business income passes through a bank account (which it should), your bank statements are your primary record.
Keep every receipt for every claimed expense. The IRD can go back five years on an audit.
What the 2026 Budget Changed for You
A couple of things from the October 2025 budget are relevant if you're a sole trader:
NIS contributions went up. Contribution rates increased by 3% from January 2026. If you pay NIS as a self-employed individual, your contributions are deductible (up to 70%) and the higher rate means a slightly larger deduction for this year.
Landlord registration is now mandatory. If your business income includes rental income from property, the 2026 budget introduced a mandatory BIR registration requirement for all landlords. There's a one-time $2,500 registration fee and a new surcharge: 2.5% on gross rental income up to $20,000 and 3.5% on anything above. This took effect January 1, 2026 and applies to your 2025 return.
Private pensions are now tax-exempt. If you've been drawing private pension income, that's now fully tax-free from January 1, 2026.
Common Mistakes Sole Traders Make
Not keeping records throughout the year. Come filing time, scrambling to reconstruct a year's worth of expenses from memory and a stack of loose receipts is painful and inaccurate. A simple spreadsheet updated monthly saves hours and money.
Missing the quarterly payment obligation. If your tax liability is over $1,000, quarterly payments are not optional. Missing them means interest on top of what you owe.
Claiming personal expenses as business expenses. The IRD knows the difference. Meals, personal clothing, holidays described as "business travel." These create problems. Only claim what is genuinely, wholly business-related.
Ignoring the Business Levy. First-year sole traders especially overlook this. If your gross receipts crossed $360,000 in 2025, Business Levy applies and it needs to be calculated on the gross, not the net.
Not reconciling to bank statements. Your declared income should match what actually came into your business bank account. Discrepancies are a red flag.
Waiting until April to pull everything together. Filing season for sole traders is more involved than for PAYE employees. Start gathering documents now.
What You Need to File
Before you sit down with e-Tax, have these ready:
- Your Profit and Loss statement for 2025
- Bank statements for all business accounts covering the full year
- Receipts for all claimed expenses
- Records of quarterly tax payments made during 2025
- Your BIR file number and ttconnect ID
- TD4 slip if you also had employment income
- Asset register if you're claiming wear and tear allowances
- For landlords: BIR registration confirmation and rental income records
The Faster Way to Get This Done
Sole trader returns are more involved than PAYE returns: more sections, more calculations, more room for error. Most self-employed people either spend a full day on it or pay an accountant a few hundred dollars to handle it.
TaxDash is built for exactly this. Walk through your business income and expenses, and TaxDash calculates your net profit, your Business Levy, your Green Fund Levy, and your income tax liability in one go. It flags every deduction you qualify for and gives you a clear picture of what you owe before you touch e-Tax.
When you're ready to file, the TaxDash Chrome extension auto-fills your 400-ITR fields directly. No transcription errors, no second-guessing which number goes where.
Start your 2025 sole trader return on TaxDash, sorted in under 25 minutes.