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Allowable Expenses and Deductions

By: J.A.J Aaronson - Updated: 6 Oct 2015 | comments*Discuss
Allowable Expenses Deductions Employment

For those who incur personal costs as a result of their job, it can often seem that the rules regarding what can be counted as an expense are impenetrably complex. This is particularly true for those who are self-employed and may work from a home office or similar. In these cases, the line between personal and professional expenses can become blurred. It pays, however, to be fully aware of the range of allowable expenses and deductions available to you. After all, they are designed to make the financial lives of those in employment easier.

Basic Definitions

The rules surrounding allowable expenses are ambiguous at best. This is in great part why they are apparently difficult to understand. There is, however, a general rule that can be applied to such circumstances. In most instances, expenditure can be counted as allowable expenses if it was required solely in order to acquire income, or if it was not spent for personal reasons, or if it was not spent on something which the purchaser intends to keep for any length of time. For example, the purchase of a computer which would also be used for personal purposes would not be counted as an allowable expense.

It is also important to note that a number of expenses which one would imagine would be allowable are not, but may be covered under capital allowances. For example, if you are setting up a business, the initial costs of machinery and buildings are unlikely to be covered as allowable expenses. However, you will almost certainly be granted relief under the capital allowances scheme for these expenditures.

Self Employment

One of the areas in which the rules regarding allowable expenses can become most complex relates to the use of the home as a work-place. Many self-employed individuals work from home, and it is often difficult to decide what personal expenses are and what can be counted as a business expense. Essentially, you are able to claim the proportion of your expenditure that corresponds to the amount of time spent using that facility for employment purposes. For example, if you have a room in your house that is devoted entirely to your job, you can claim the proportion of the rent that relates to that room as an allowable expense. Similarly, you can claim the same corresponding proportion of your phone bill, and so on.

If you have any employees, the rules may appear to become even more complex. Essentially, any National Insurance Contributions (NICs) are counted as allowable expenses as long as they relate to employees. NICs are not permissible as allowable expenses if you are paying them on your own behalf, and Income Tax payments are not permissible regardless of on whose behalf they are being paid.

Allowable Expenses and Debt

Finally, it is worth looking at the rules surrounding allowable expenses and debt. In basic terms, any interest paid on debts for business purposes is permissible as an allowable expense, unless it is a bad or questionable debt. Similarly, interest payments on business overdrafts may be counted as allowable expenses, but interest on loans to business partners may not.

As with all such considerations, it is always advisable to seek the advice of a Reputable Chartered Accountant before taking any action in this field, particularly if you are self-employed.

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Pj - Your Question:
I have recently retired from psos and receive a pension. I have started work as a game beater. This entails working on the hills in adverse weather conditions. I do not have a suitable clothing or footwear to carry out these duties. Am I entitled to claim for the purchase of suitable clothing and footwear?

Our Response:
I have included a gov.uk link here which may give you more information. You may also ask your empoyer whether they would be able to contribute or supply you directly with the clothing. In jobs where there is an element of risk, employers should ensure they carry out rigorous risk assessments and identify ways to provide protection to their employers, which can include providing protective clothing.
TheTaxGuide - 7-Oct-15 @ 11:20 AM
Pj - Your Question:
I have recently retired from psos and receive a pension. I have started work as a game beater. This entails working on the hills in adverse weather conditions. I do not have a suitable clothing or footwear to carry out these duties. Am I entitled to claim for the purchase of suitable clothing and footwear?

Our Response:
You should ask your employer about this and whether they are willing to contribute towards wet/cold weather gear.
TheTaxGuide - 7-Oct-15 @ 11:10 AM
I have recently retired from psos and receive a pension. I have started work as a game beater. This entails working on the hills in adverse weather conditions. I do not have a suitable clothing or footwear to carry out these duties. Am I entitled to claim for the purchase of suitable clothing and footwear?
Pj - 6-Oct-15 @ 9:34 AM
hi, I am a single person working as a support worker in challenging behaviour, I have heard that it is possible for me to get an allowance for clothing. I am working for a company and have for over 5 years now, I do not have a to wear a uniform, therefore buy all my own clothing.As it is challenging behaviour that I work in, my clothing does get ruined due to being torn, stretched and stained caused by the service users. I would be grateful if you could enlighten me with this query and if entitled to this, give me some information of who to contact or a site to go on. thank you.
angie - 15-Jan-14 @ 3:32 PM
A single friend has had to go into a care home in England and to finance this is renting her home. The net rental income is taxable income. Is the cost of care home a taxable expense?
Dantheman - 19-Jun-13 @ 6:17 PM
I have had to suddenly return to England and have not had time to give my tenant 2 months notice. I have nowhere to live and am obliged to rent a flat for a minimum of 6 months before I can move back into my original flat. Can I claim the full rental payments against tax as they are directly related to my status as landlord?
Rouget - 2-Mar-13 @ 5:42 PM
I worked as an employee for a fixed term for 6 months and had to rent a student room and travel from my house which is very far from the work place and in different city and county. It takes nearly 4-5 hours to get to the work place so it became necessary to rent a room near the work place. What expenses I can claim on my return as I paid a lot of accomodation and travel costs during this 6 months paye job. The employer did not pay any expense and did not pay for the interview cost.Thanks in advance for your reply
chotu - 28-Jan-13 @ 10:54 AM
I work in finance yet still find the whole expenses process so confusing. In the old days I could claim most items but now it's almost as if I have to employ someone to help me.
Susan - 7-Nov-12 @ 7:58 AM
Can I get help with cost for laundery for washing work uniforms
Twilight - 26-Sep-12 @ 7:53 PM
This is really helpful in giving me info about allowable expenses and debt.I just started a home business and I am not aware that it is possible to claim a portion of what I use like internet, phone, etc.
Chris from Best 2012 - 24-Sep-12 @ 4:50 AM
Hi I have started working for myself in the modelling/promotional industry. Can you advise what I am able to claim for please re travelling and expenses. I present on TV and have to purchase clothes/makeup etc for the job. I also travel to and from Ireland as my partner lives in Eire, am I able to claim for any of the flights? I am a UK citizen and reside in the Uk. Many thanks Lexi
Lexi - 22-Sep-12 @ 5:44 PM
Hi,I worked abroad for three months and the only way to get to work from my new flat was with a hire car. My car was left in the UK (taxed and insured) and my company are telling me I have to pay benefit in kind tax. Is this true even if the car was abroad and I kept a car in the UK?
sssss - 6-Sep-12 @ 7:27 PM
Is it possible to deduct private expenses for studies (such as ACCA and CPA) on your employee tax return if your employer does not offer study support?
sara - 14-Jun-12 @ 2:54 PM
Is it correct that my company can refuse to reimburse me my valid business expense (for rail travel) claiming "as it is over 3 months old it is not payable"? My manager signed off my expense claim!
Trebor - 19-Mar-12 @ 2:44 PM
What is the daily agreed daily subsistance rate set by hmrc if your business is on the move. I am a collection & delivery driver.
ernie - 4-Oct-11 @ 8:42 PM
Hi My dad has recently started his own limited company from his own home, can you advise how much he can claim for use of home etc for the use of a room in his house. I assume he can claim a proportion of internet, telephone etc?
Dazzer - 23-Jun-11 @ 9:04 PM
Actually the notes given are relevant to any person handling taxation and it gives the deepest meaning in every key factor you are looking for. Thanks to whoever who came up with such a program.
Nick-Brills - 21-Mar-11 @ 2:26 PM
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