Tax Deductible Expenses

Its Tax Return Season!

Every year around this time clients ask the same questions about what expenses they have incurred can be deducted against their income and reduce their tax bill.

The test is if the costs are “wholly and exclusively” in pursuit of their trade or not. One bugbear I always get asked is if clothing is tax deductible or not? The short answer is no, HMRC says that clothes may be worn for business reasons but that they serve a dual purpose as they also keep you warm so it fails the wholly and exclusively test. If the clothing items were specifically for work use such as steel toe capped boots or uniforms such as clothing with company logos these would be permissible.

Another area clients get in a pickle with is their premises costs. While there is a simplified expenses calculator, most clients are better off calculating what proportion of their home they use for business (say 1/5, one out of 5 rooms for your average flat) and then add up rent, utilities, internet etc and apply the fraction to the total.