What are drawings?
Definition of drawings
Drawings are sums of money that a sole trader or partner takes out of their business bank account.
Drawings can be:
- Withdrawals from your business bank account
- Transfers from your business bank account to a personal account
- A payment for a personal cost from your business's bank account.
'Personal costs' paid out of the business bank account might be:
- Contributions to your pension scheme; these go in a different part of your tax return from your business's accounts.
- Your own income tax and National Insurance payments; HMRC view these as a personal liability, rather than a business one, for sole traders and partners.
- Costs that are clearly non-business, like your weekly shop or family holiday.
Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.
