Tax Return Expense Categories Explained
When it comes time to complete your tax return you’ll notice that the HMRC itemize all of your taxable expenditure into separate categories. However as many of you will know, it can prove rather difficult when trying to decipher which of the categories to put your expenses in!
So today I wanted to do an all-encompassing blog which just outlines what each of the headings are and what can be claimed under each category to simplify your tax return.
Accountancy, Legal and other professional fees
Allowable Expenses
– Accountants
– Solicitors
– Surveyors
– Architects
– Other professional indemnity insurance premiums
Non-Allowable Expenses
– Legal costs of buying property and large items of equipment
– Costs of settling tax disputes
– Fines for breaking the law
Advertising and business entertainment costs
Allowable Expenses
– Advertising of your business
– Mailshots
– Free samples
– Website costs
Non-Allowable Expenses
– Entertaining clients, suppliers and customers
– Hospitality at events
Bank, credit card and other financial charges
Allowable Expenses
– Bank, overdraft and credit card charges
– Hire purchase interest and leasing payments
– Alternative finance payments
Non-Allowable Expenses
– Repayment of the loans or overdrafts or finance arrangements
Car, van and travel expenses
Allowable Expenses
Car and van:
– Insurance
– Repairs
– Servicing
– Fuel
– Parking
– Hire charges
– Vehicle Licence fees
– AA/RAC Membership
– Train, bus, air and taxi fares
– Hotel room costs
– Meals on overnight business trips
Non-Allowable Expenses
– Non-business motoring costs (private use proportions)
– Fines
– Costs of buying vehicles
– Travel costs between home and business
– Meals not on overnight business trips
Communications, stationary and other office costs
Allowable Expenses
– Landline phone
– Mobile phone
– Internet
– Email
– Fax running costs
– Postage
– Stationery
– Printing
– Small office equipment costs
– Computer software
Non-Allowable Expenses
– Non-business or private use proportion of expenses
– New phone, fax, computer hardware or other ‘large’ equipment costs
Construction industry – payments to subcontractors
Allowable Expenses
– Construction industry subcontractors payments (before taking off
any tax)
Non-Allowable Expenses
– Payments for non-business work
Cost of goods that you are going to sell or use in providing a service
Allowable Expenses
– Cost of goods bought for resale
– Cost of raw materials used
– Direct cost of producing goods
Non-Allowable Expenses
– Cost of goods or materials bought for private use
– Depreciation of equipment
Deprecation and loss/profit on sale of assets
Insurance policy
Allowable Expenses
– Costs of any business specific insurance policy
Non-Allowable Expenses
– Recoverable costs
Interest on bank and other business loans
Allowable Expenses
– Interest on bank and other business loans
– Alternative finance payments
Non-Allowable Expenses
– Repayment of the loans or overdrafts, or finance arrangements
Irrecoverable debts written off
Allowable Expenses
– Amounts included in turnover but are unpaid and written off because they will not be recovered
Non-Allowable Expenses
– Debts not included in your turnover
– Debts relating to fixed assets
– General bad debts
Other business expenses
Allowable Expenses
– Trade or professional journals and subscriptions
– Other sundry business running expenses not included elsewhere
Non-Allowable Expenses
– Payments to clubs, charities, political parties etc.
– Non-business part of any expenses
– Cost of ordinary clothing
Rent, rates, power and insurance costs
Allowable Expenses
– Rent for business premises
– Business rates for water, light, heat, power,
– Property insurance
– Security
– Use of home as office (business proportion only)
Non-Allowable Expenses
– Costs of any non-business part of premises
– Costs of buying business premises
Repairs and renewals for property and equipment
Allowable Expenses
– Repairs and maintenance of business premises and equipment
– Renewals of small tools and items of equipment
Non-Allowable Expenses
– Repairs of non-business parts of premises or equipment
– Costs of improving or altering premises and equipment
Wages, salaries and other staff costs
Allowable Expenses
– Salaries
– Wages
– Bonuses
– Pensions
– Benefits for staff or employees
– Agency fees,
– Subcontract labour costs
– Employers’ NICs etc
Non-Allowable Expenses
– Your own wages and drawings
– Your own pension payments
– Your own NICs Payments
– Payments for non-business work
And that’s everything in a nutshell!
I hope that helps and if you want anymore information just contact me at info@zlogg.co.uk
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