Allowable expenses

Allowable business expenses can be used to reduce your overall tax bill.

In order for an expense to be regarded as business related – and therefore allowable as a deduction from your tax bill – it must be:

• Regarded as a 'Revenue expense' and not a 'Capital Expense'. A Capital Expense is an expense that is normally once off purchase of an asset (for example, a car, furniture or computer). A Revenue Expense normally refers to expenditure which is incurred on an ongoing basis (e.g. electricity or stationery).
• Incurred 'wholly and exclusively for the purpose of the trade'.
• Not specifically disallowed in tax legislation.

And, where an expense relates to both business and private use, only the proportion of the cost that relates to business activity can be expensed.