Claiming expenses

The most common question we are asked is “What expenses can I claim against tax?

The answer is not straightforward as a number of different tax rules may come into play and it will also depend on your individual circumstances.

To help we have compiled a list of possible expense deductions for various trades. If you email us the details of the trade sector in which you operate, we can email a list of possible deductions.

General rules

There are two general rules which apply across most cases and these are slightly different depending on whether you are looking at a business expense deduction or an individual deducting an expense from a salary from a job

                Business

The cost must be “wholly and exclusively” for the purpose of the trade

If the cost is incurred in order to generate trade sales, then it will be allowed as a deduction against your taxable income from that trade

If the cost is incurred on capital assets which may be used to generate trade income over a number of years in the future ( e.g. a van or furniture), then it will not qualify as a deduction against your taxable income. However, it may qualify under the Capital Allowances rules, which allow for a certain deduction as calculated under those rules

                Never rely on the general rule, always take specific advice                                        contact us

                Individuals

The cost must be “wholly exclusively and necessarily incurred in the performance of your duties”

A stricter rule then that applying to business deductions. In addition, there are further specific rules applying to certain costs, e.g. travel

There are some flat rate expenses that can be deducted which depend on the trade sector in which you operate

One of the key differences is that there can often be no duality of purpose. For example, a smart business suit may be purchased to look smart for a sales meeting, but it can also be worn out on social events so would not qualify as a deduction. You cannot split the cost between business and private and claim the business element.

Never rely on the general rule, always take specific advice                                        contact us

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