Tax allowable business expenses are expenses that can be deducted from a business's income for tax purposes, reducing the amount of taxable profit and, therefore, the amount of tax payable. The specific expenses that are allowable for tax relief may vary depending on the nature of the business.
In the UK, some examples of allowable business expenses that may be eligible for tax relief include:
1. Office expenses: Rent, rates, utility bills, insurance, and office equipment (e.g., computers, printers, and furniture) used solely for business purposes. 2. Travel expenses: Business-related travel costs, such as fuel, train or bus fares, taxi fares, and parking fees. 3. Staff costs: Salaries, wages, bonuses, employer National Insurance contributions, and pension contributions for employees. 4. Marketing and advertising: Costs associated with promoting the business, including website design, online advertising, and print advertising. 5. Professional fees: Fees for accountants, solicitors, and other professionals who provide business-related services. 6. Training costs: Costs associated with training courses or seminars that are directly related to the business. 7. Stock and materials: Costs of buying or producing goods for sale, including raw materials, stock, and packaging. 8. Repairs and maintenance: Costs associated with maintaining and repairing business equipment, machinery, and property. 9. Business insurance: The cost of business insurance policies such as public liability insurance, employer liability insurance, and professional indemnity insurance.
It's important to keep accurate records of all business expenses and to ensure that they are solely for business purposes. Additionally, not all expenses are eligible for tax relief, and the rules around allowable expenses can be complex and any query items should be checked with accountancy advisors.
Expenses that cannot obtain business tax relief
Disallowable business expenses are expenses that cannot be deducted from a business's income for tax purposes, meaning they cannot be used to reduce the amount of taxable profit and the amount of tax payable. In the UK, some examples of disallowable business expenses include:
1. Private expenses: Any expenses that are not wholly and exclusively incurred for business purposes, such as personal phone calls, entertainment expenses, and personal travel expenses. 2. Depreciation: The cost of buying or improving assets, such as buildings, machinery, or equipment, cannot be deducted in full in the year of purchase. Instead, these costs are spread over the asset's useful life through a process called depreciation. The depreciation expense is disallowable for tax purposes. 3. Fines and penalties: Any fines or penalties imposed by regulatory bodies, such as HM Revenue & Customs, are not deductible for tax purposes. 4. Political donations: Any donations made by a business to political parties or lobbying organizations are not deductible for tax purposes. 5. Gifts and entertainment: Any gifts or entertainment expenses that are not wholly and exclusively incurred for business purposes, such as giving gifts to customers or suppliers, are disallowable. 6. Business entertaining: The cost of entertaining clients or customers is not deductible, except in certain limited circumstances, such as when the entertaining is incidental to a business meeting