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  • Writer's pictureGreenline Accountants

A look at Limited Company Expenses #6 :(Inc. Sole Traders) - The "Big List"

To finish off our series on "Limited Company Expenses", we decided to go back to basics with a recap of some of the main expenses allowable by HMRC to offset against profit. Many of these are equally applicable to sole traders.

The list is not exhaustive and remember HMRC's rule of the expense being incurred solely and exclusively for business use - otherwise the expense may have to be apportioned, or disallowed entirely.

As always, these articles are for information only and do not constitute formal advice - should you wish for detailed, specific guidance, please contact us directly to discuss your circumstances.

Examples of Revenue Expenses (operational expenses or expenses incurred for short periods)

  • Wages, salaries and related staff costs

    • Salaries, bonuses, pensions, benefits for employees

    • Employer’s National Insurance Contribution (NICs)

    • Agency fees

  • Insurance, rent, rates and power

    • Rent costs for the business premises

    • Business rates

    • Water rates

    • Light

    • Heat

    • Power

    • Property insurance

    • Security

  • Maintenance and repairs to equipment and property

    • Repairs and maintenance of business equipment and property – buying, improving or altering a property is not included (see Capital Expenses)

    • Cleaning

    • Workwear and uniform

  • Car, van and travel

    • Car and van insurance if the vehicle is an asset of the business

    • Repairs, servicing and fuel

    • Hire charges

    • Vehicle license fees

    • Train, bus, air and taxi fares (excluding travel to and from home to a permanent place of work)

    • Hotel accommodation when on business trips

    • Meals for over night business trips

    • Inoculations for overseas travel

    • Visas for business travel

  • Advertising and marketing

    • Advertising in print media

    • Paid listing in directories

    • Website costs (hosting)

    • Mailshots

    • Online advertising and paid ads

    • Television and Radio Advertising

    • Paid promotion and sponsorship

  • Other office running costs

    • Telephone (landline and mobile)

    • Mobile phone

    • Broadband

    • Stationery

    • Printing

    • Postage

    • IT software

    • Some small office equipment

  • Professional fees

    • Fees for solicitors, accountants, surveyors, architects and other professionals

    • Professional indemnity insurance premiums

  • Banking and other financial charges

    • Bank, overdraft and credit card fees

    • Hire purchase interest and leasing payments

    • Alternative finance payments

What expenses are not allowable?

As mentioned, some revenue expenses may be disallowed entirely as deductions against profit as they are either used to derive personal benefit too, or are not relevant in terms of tax reliefs which. For example -

  • Business entertainment

  • The repayment of loans taken out personally to help run the business

  • The depreciation of assets

  • Drawings including payments for tax and NI

  • Fines and costs such as car parking fines, if incurred by proprietors or directors

  • Charitable donations, including subscriptions, with the exception of small charities

  • Political donations

Capital Expenditure

Expenditure on assets that are likely to have a lasting benefits, which we often define as more than a year are known as capital expenses. Capital expenses will not generally appear as a straight deduction in the P&L, but are often written down over several years, in order to match a little of the expense over the entirety of the assets working life. The written down percentage can vary depending on the asset, and indeed in some cases a 100% deduction is allowed in the first year (see plant and machinery under Annual Investment Allowance here), or even a 130% deduction (see "Super deduction" in the same article).

Capital Expenditure includes but is not limited to

  • Plant & Machinery

  • IT and digital Equipment

  • Office Furniture, fixtures and fittings

  • Vehicles

  • Buildings

  • Software

  • Intangible Assets such as Patents/Trademarks

Again this is just a rough starting guide and if you have specific queries about whether a potential expense would be tax deductible or not, then please do not hesitate to get in touch.


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