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16 Apr

Business Expenses You Can Claim

What expenses can you claim?

Basically, businesses can claim for most expenses that occur wholly and exclusively for the purpose of a trade. However, most of the decision making by HMRC on this topic is guided by tax law. Which is known to be inconsistent.

Here are a few guidelines to help walk you through;

  • Professional fees: allowable in most cases unless the fees relate to:

  1. The purchase of property or another business asset

  2. The cost of settling tax disputes

  3. Fines for breaking the law, eg parking fines

  • Entertaining expenditures is deemed a non-allowable expense for tax purposes.

  • Motoring costs: the cost of running a business car for business needs are allowable, but running a business vehicle for private needs are not. Home to work journeys are generally considered private.

  • Travel expenses: All business travel related cost are allowable. Again, home to work are not

  • Bank and credit card charges: When related to business purposes, such as bank interest charges on loans or overdraft are tax allowable. The capital repayment of these loans are not.

  • Costs of goods: Goods bought for resale by the business or those that are consumed during the day-to-day running of the business activities are deductible. Again, goods taken for private use are not.

  • Costs of assets: The cost of plant, vehicles and equipment purchases for business use are held on your balance sheet as assets. The costs are gradually written off against profits by making a depreciation charge. Even though the depreciation charge is a reduction in profits it is not allowed as a tax deduction. Instead, the HMRC grant a capital allowance, which can vary from 8% to 100% of the allowance asset cost, or its written down for tax purposes.

  • Bad debts: If a debt occurs because a customer has failed to pay an invoice and the debt it considered irrecoverable, the sale values can be written off for tax values. Debts relating to assets or general provision for bad debt are not allowable.

This is only a small range of costs and expenditure you may need to layout when running your business.

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