1. Clothing for work can be a tricky one
Clothing for work is an allowable expense, however, there are specific rules, you need to follow. You can claim for:
- Uniforms - clothing with your company's logo on
- PPE you need for work
- Costumes for actors
Everything else is disallowable because it fails the wholly and exclusively rule. You cannot claim for everyday clothing (even if you wear it for work).
What does this mean? You cannot claim expenses for buying a suit to meet potential clients, because you would be able to wear it outside work, which would not make it wholly and exclusively for your business.
However, you could have your business logo put on your work clothes and that would make it an allowable expense. It would also make you look more professional and wouldn't cost you arm and a leg.
2 Travel from home to your office,
or usual place of work. If you are renting an office, the travel from home to your usual place of work is a disallowable expense.
- If you work from home and you agree to work from the office, or a client's base for a couple of days a week, on a regular basis, the travel will still be disallowable and you can't claim mileage, as the journey would become a regular pattern and therefore is disallowable.
Mileage can be claimed for any other business trips. If you decide to use your car, you can claim 45p per mile, for the first 10,000 miles and 25p thereafter. The easiest way to keep your mileage is to use a mobile tracker.
3. Fines and penalties
Business is supposed to operate within the law and therefore fines such as a fine for late Self-Assessment submission, VAT fines or parking fines are not deductible expenses. Late payments interest and late payments fee are also disallowable.
If one of your employees gets a parking fine, while on business, those are allowable. However, Director's fines are disallowable.
4. Entertaining clients
Client entertainment is classed as a disallowable expense. Taking a potential client to lunch isn't allowable, even if it brings you business. It may be in your accounts as an expense, but it will always be added back for tax purposes.
5. Personal expenses
You can not claim expenses that are not related to your business. Only expenses, that are wholly and exclusively for the business qualify.
- If you have a
gym membership, it can not be classed as a business expense, even if you meet potential clients there, because you can go there anytime, even if you are not meeting anyone. (It would only be your allowable expense if you are a gym instructor and the gym is your usual place of work.)
I hope you have a better understanding of what are disallowable expenses now. If you still need any guidance, just send us a message or email us.
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the most common expenses in resources.
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