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Tax Deductible Expenses PDF Print E-mail
What expenses are tax deductible?

Type of expense    Deductible  expensesNot deductible 

Normal business expenses generally

Expenditure incurred wholly and exclusively in the course of business

Personal expenditure including client entertaining. Staff entertainment is allowable

Capital items (i.e. items expected to be used for more than 1 year)

An annual capital allowance is available on most items of equipment

Freeholds and long leaseholds of most non-industrial premises

Computer software

If bought separately from hardware and the software is expected to have a useful economic life of less than two years and does not have a sufficiently enduring nature, the expenditure is revenue otherwise it is treated as plant

Generally, computer software is plant and therefore qualifies for capital allowances

Gifts to customers

Gifts costing up to £50 and contain a conspicuous advertisement for the business. Examples are diaries, pens, etc.

The gift is food, drink or tobacco, or a token or voucher exchangeable for goods

Use of home as office

Reasonable proportion of home running expenses, depending on the extent of use of home for business. These may include building insurance, council tax, mortgage interest, rent, repairs and maintenance ,etc HMRC manual - BIM47820

Domestic expenses not related to the business

Telephone bills

Business proportion based on calls and a proportion of line rental

Private element and a proportion of home line rental

Motor expenses

Business proportion based on mileage.
If the car is owned by the director, running costs such as repairs, insurance, tax disc, cannot be claimed by a Limited Company. Director submits a claim based on business mileage

Private element of motor running costs

Travel expenses

Business travel

Travel between home and normal place of business


Professional subscriptions to professional bodies approved by HMRC

Clubs, charities and items not associated with the business

Wages and salaries

Staff (including family where duties genuinely carried out)

Proprietor's own drawings and gratuitous wages to family

Bank charges and interest

Charges on business accounts and overdraft interest

Interest for personal overdrafts and loans

Loan interest

Interest on business loans and loans from directors

Interest on income tax paid late and interest paid to sole proprietors


Business related policies including, Employer’s liability, premises insurance etc

General provisions and debts written off voluntarily

Bad debts

Specific bad debts from unrelated parties

General provisions and debts written off voluntarily

Accountancy fees

Fees for normal business activities

Costs of unsuccessfully defending an Inland Revenue investigation

Legal fees

Most business related advice

Partnership agreements, company formation, property acquisition and renewing long leases

Personal expenditure

Modest subsistence expenses in certain cases when working away from normal place of business

Lunches, private expenses and bills, gifts, clothing (unless a uniform)

Director and Staff Pension contributions

Pensions paid by the company on behalf of directors and staff

Pensions paid for third parties e.g. directors’ spouse

Credit card interest

Interest on company credit card

Interest on a personal credit card
Entertainment Staff entertainment - BIM45033 Customer entertainment 


Parking permits are allowable

Parking fines are not deductible

Congestion charge

If the car is owned by the limited company, the charges are deductible by the company

If the car is not owned by the Limited company, the charges are not deductible - might give rise benefit in kind


Protective clothing or uniform for certain trades 

Generally not deductible

Training courses

If they upgrade an existing skill

If they
give business proprietors new expertise, knowledge or skills, which they lack they are not allowable


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