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Tax deductible expenses

Claimable Expenses

There are many other expenses that you as a contractor, freelancer or small business can claim, please read on below.

Accountancy fees

The good news is that your accountancy fee is fully tax deductible – unless it is for company set up or relates to your personal tax return.

Legal fees

Legal fees are usually allowable, and this includes costs of chasing debts, defending trademarks, preparing legal agreements.

Note, legal fees relating to capital items such as acquiring a new lease or buying a new property are not allowable.

Bank charges

Bank charges are fully allowable as long as they relate to business bank and loan accounts.

Clothing

Clothing is not an allowable expense unless it is a uniform, safety clothing or has a company logo.

This means that business suits are not allowable, regardless if you never wear a suit outside work.

Interest

Interest on loans and other debts are allowable as long as they are wholly and exclusively taken out for business purposes.

Business entertainment

Although business entertainment provided to clients may well be wholly and exclusively for business purposes, it is not allowable for tax purposes. You can however pay this from the company bank account.

Annual event

Annual events, such as Christmas parties are allowable against corporation tax as long as all employees are invited. For contractors and freelancers this will typically just be you on your own!

However, do not spend more than £150 per employee, otherwise the whole amount will be a personal taxable benefit.

Capital expenditure (computers, cars, furniture and office equipment)

Most contractors, freelancers and small businesses need computers, furniture and other office equipment. These are known as fixed assets or capital expenditure. As long as these are used for business purposes, you can claim up to £25,000 each year on these types of capital items (increasing to £250,000 for two years from 1st January 2013). If you spend more than this, you can still claim the amounts, but just split over a number of years.

Gifts

Gifts on the whole are not allowable, HMRC particularly disallow food, drink or tobacco.

However, if the gift is less than £50, they bear your logo and it is not food, drink or tobacco then it is deemed allowable by HMRC

Next: “Claimable Expenses:Home as office”
Any questions? Speak to one of our friendly accountants on 020 7969 2879.