Taxation: Allowable Expenses

Business or Corporation Taxes are payable on profits. Profits are calculated by deducting 'Allowable Expenses' from your turnover.

Allowable expenses include:

The costs of any goods or materials bought as stock and then resold; rent and running costs for premises; marketing costs; costs of travel to see customers; financing costs; and general running expenses such as postage and telephone.

Costs which are not allowed include:

Personal expenses such as travel to work; clothes or living expenses; entertaining clients; and fines such as parking tickets. The cost of buying equipment (such as computers) or premises is not allowed as a business expense - these areas are covered by the Capital Allowances system. Currently 50% of equipment purchase costs are tax free in your first year of business. After that, 25% of equipment purchase costs are tax free.

This material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.