In this blog, Darren Stone of Leon and Company Chartered Accountants in Leeds answers your burning tax queries.
As accountants, we often get approached by clients and the public with all sorts of tax questions. So, over the next few articles, we continue to answer some of the more common questions. Here is just a selection of recent queries:
Is it true I can claim for eye tests and spectacles as a business expense? A business can, in certain circumstances, claim for eye tests and spectacles for employees using a VDU in their line of duty. But the spectacles must be prescribed specifically for VDU-use, or a taxable benefit will arise. This doesn’t extend to the self-employed individual as it applies to employees only.
Can I claim tax relief on health insurance and school fees? If you have a company, it may pay for these type of expenses; but be aware you would be taxed as if you had received extra income to cover those costs. However, certain insurances that protect the business can be allowable; examples can include key-person cover and relevant life policies. The payment of such premiums is extremely tax efficient.
Can I claim for meals out, including when I treat a perspective new customer to lunch? If you are working away from your main base, then subsistence costs can be claimed, including lunch, possibly dinner and refreshments. That being said, the cost of food and drink must be demonstrably reasonable. If you treat a customer (or any contact!), then this is considered ‘entertaining’ and although it is a legitimate business expenses, no tax relief is granted on such hospitality expenditure.
Can I claim professional fees incurred during the year? Certain legal fees attract tax relief; mainly those relating to trade issues such as drafting a contract, supplier disputes, and employee issues. But be careful, as legal fees relating to shareholders, the company’s structure, and even certain property lease work are not necessarily tax allowable. In general, other professional fees do attract tax relief, including architects, surveyors for business premises, and even accountancy fees! But you should remember that your accountant’s fees for preparing your own, personal, tax return is not actually a business expense – so is not usually claimed.
So far, it sounds like there is so much I can’t claim for. Is there any good news? Certainly! You can claim for all sorts of areas, including stock, equipment, advertising, insurance, repairs, postage, stationery, travel, staff, etc. These can be claimed in your accounts as a deduction against your income; therefore, allowable for tax purposes. So long as the costs are wholly connected with your business, then they would qualify for 100% tax relief.
This is just the tip of the ice-berg with tax questions. In all cases, this article should not be relied upon to make decisions – always seek professional advice first.