There have been a lot of headlines recently highlighting the spending habits of our Honorable MP’s. With this in mind, we thought we would help those of us not blessed with such a loosely managed expenses system, with a brief outline of exactly what you can claim.
It is impossible to list all the expenses that can be deducted but, generally speaking, allowable expenditure relates to day to day running costs of your business. It includes such items as wages, rent, lighting and heating of business premises, running costs of vehicles used in the business, purchase of goods for resale and the cost of replacing tools used in the business.
Examples of non allowable expenditure are your own wages, premiums on personal insurance policies, income tax and National Insurance contributions.
Where expenditure relates to both business and private use, only the part that relates to the business will be allowed, examples are lighting, heating, and telephone expenditure. If a vehicle is used for both business and private purposes then the capital allowances and the total running expenses will be split in proportion to the business and private mileage. You will need to keep records of your total mileage and the number of miles travelled on business to calculate the correct split.
Capital expenditure is expenditure on such items as the purchase or alteration of business premises, purchase of plant, machinery, and vehicles, or the initial cost of tools.
You cannot deduct ‘Capital expenditure’ in working out your taxable profits, but some relief may be due on this type of expenditure in the form of Capital Allowances.
If you are in any doubt about your expenses, please use our contact form on the Contact Us page and we will be happy to discuss your concerns and where necessary, arrange for a site visit. Remember, if in doubt KEEP THE RECEIPT! – it wont hurt
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