Record Keeping – What you need to know – Part 3

Ok, I know it has been a long time since I posted the first 2 parts of this article on Record Keeping- What you need to know but I am here now and hope this helps some of you out with understanding what expenses are allowable for tax purposes.

Allowable Expenses

The final topic on record keeping I wanted to tackle was expenditure, what you can and cannot use against your tax. There are many misconceptions as to what expenses are allowable and which are not. Some of the common questions I get asked are below:

Travel expenses: Depends on the circumstances

  • Petrol Costs – Yes if not claiming mileage but must be restricted for the personal use element
  • Mileage – yes for business mileage only (ie to and from a meeting but not to and from the office)
  • Car Insurance – Yes if not claiming mileage but restricted for the personal use element.
  • Train/Bus Fares – Yes if travelling to a meeting, conference or other business purpose
  • Car repairs & Maintenance– Yes if not claiming mileage but restricted for the personal use element.
  • Meals when away on business
  • Parking/speeding fines – No as a general rule but there are some exceptions where it is for an employee and they are taxed appropriately

Entertaining:

  • Client Entertaining – No
  • Staff Entertaining – Yes to a small amount (£150 or less per head, be an annual party Xmas party, open to all employees) you may however need to report it on a P11D. Employees earning less that £8,500 pa do not need to be reported.

Use of Home as Office- see HMRC simplified expenses calculation

  • Gas & Electric – Yes if apportioned in an appropriate manner
  • Interest on your mortgage– Yes if apportioned in an appropriate manner
  • Cleaner– Yes if apportioned in an appropriate manner
  • Insurance– Yes if apportioned in an appropriate manner
  • Council tax– Yes if apportioned in an appropriate manner
  • Repairs– Yes if apportioned in an appropriate manner

Mobile Phone –  Yes for a business element or in entirety if used only for business purposes

Gifts – Generally No, however, small gifts that include advertising is normally allowed (ie USB stick or branded sweets etc)

Professional Subscriptions – Yes if it directly relates to your business

Your Car/Van

  • Purchase cost – depreciation/capital allowance for the year provided it is apportioned for personal usage if there is any
  • Interest on finance agreement – Yes if not claiming mileage but restricted for the personal use element.

Useful links:

HMRC Guidance: Private & Personal Expenditure Toolkit

HMRC Simplified Expenses Calculation

HMRC Guidance on Sole Trade business records

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