TAX Allowance Questions Answered

Q

What are the main tax allowable expenses for my business

It is not possible to lay down rules on what are and are not allowable expenses for every type of business, however this is a quick guide. The rule of thumb is that costs which are incurred for the sole purpose of making profit in your business are allowable, excluding all personal elements.

There are 4 main areas:

Basic Costs

Allowable

Light, heat and power. Telephone, Insurance, stationery and postage, business rates and rent, advertising, protective clothing, repairs, replacement, loose tools (but see costing and pricing) transport of goods to customers or materials from suppliers, sub-contractors.

Non- Allowable

Private and personal expenses, non business part of running costs of running premises used only partly for business. Your own personal insurance, ordinary everyday clothing, parking and other fines, buying, altering or improving fixed assets, depreciation or loss on sale of fixed assets.

Employee Costs

Allowable

Employees wages and salaries, employers national insurance contribution, redundancy payments, pension contributions for employees, employees expenses and benefits.

Non-Allowable

Your own wages, salary or drawings, your own pension payment and other benefits (although you may be able to claim these elsewhere on the Self Assessment return) Your own NI contributions

Finance Costs

Allowable

Interest on loans and overdraft used solely for the business, costs of arranging this finance

Non-Allowable

Repayment of the capital part of that loan or overdraft

Professional Costs

Allowable

Accountancy fees, preparation of ordinary business agreements, debt recovery, renewable leases of less than 50 years, defending business rights, appeals against business rates,

Non-Allowable

Costs of settling tax disputes, legal costs of buying fixed assets, costs and fines or penalties for breaking the law.