The underlying rule is that expenses must be ‘wholly and exclusively’ for the purpose of your trade and evidence must be available should HMRC request it. Such expenses are generally included within financial statements but not necessarily allowable for tax purposes.
Please note that whilst this list includes various expenses, it may not capture all non-tax deductible expenditure but these tend to be the most common.
- Fuel expenses attributable to non-business use of vehicles.
- Any payments made relating to non-business work.
- Depreciation of plant.
- Employment costs that are not paid within 9 months of the end of the period of account, or any payments made for non-business work.
- Non-business part of premises costs used partly for business. Costs of acquiring premises.
- Cost of repairs of non-business parts of premises and equipment used partly for business. Costs of alteration, improvements or replacements to business premises.
- Partners’ private and personal expenses. Non-business part of costs used partly for business, payments to political parties. Most payments to clubs, charities or churches. The partners’ insurances.
- Non-business motoring. Travel between home and business. Costs of buying vehicles. Parking and other fines.
- Meals (except the reasonable cost of meals on overnight business trips).
- Entertaining and hospitality (except gifts of up to £50 a person a year advertising your business and are neither food nor drink, and the costs of entertaining staff).
- Costs of settling tax disputes, legal costs of buying fixed assets (these are treated as part of the cost of the fixed asset) or structure of business such as LLP agreements. Costs and fines or penalties for breaking the law.
- General bad debts reserve. Debts that were not taxed when they arose, for example, because they relate to a sale of a fixed asset. Not relevant if your business is using the cash basis.
- Repayment of the loan, alternative finance arrangement or overdraft. In addition, if your business is using the cash basis, the maximum allowable amount for interest on the loan is £500 – disallow any amounts in excess of this.
- Repayment of the loan, alternative finance arrangement or overdraft.
- Generally, depreciation and losses on assets are not allowable for tax, and profits on assets are not taxable receipts. However, to the extent that any of these items are attributable to assets held under finance leases, a different treatment may be appropriate.
- Ordinary, everyday clothing even if bought specially for business use.
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