Each year, accountants get asked all kinds of questions about what expenses can get put through their business. This year was no different for Kilby Fox!
I thought it would be useful to give some examples of the kind of questions I’ve been asked, and their answers. In the hope that it helps other business owners to gain an understanding of the type of thing they can, and can’t, put through their business.
Can I claim the cost of my wife’s Master’s Degree?
In most cases, no. Put simply, the cost of keeping your current skills updated is tax-deductible, however, the costs of training to acquire new skills are not tax-deductible.
In most cases, obtaining a Master’s Degree would come under the ‘acquisition of new skills’ rule and so you wouldn’t be able to get tax relief.
This is all assuming the Master’s degree is not actually “wholly and exclusively” for the purposes of the trade; a phrase that HMRC likes to use.
If the skill being learned/updated isn’t relevant to the business, it won’t be tax-deductible.
As an example:
My client was an IT consultant and their wife’s Masters Degree was in dentistry. I mean there’s pushing it, and then there’s this…
Can I claim my personal car insurance as a business cost, as I use my car for business?
You use your car for business so why can’t you put through at least a percentage of your car insurance? The answer is that you probably already are claiming this, although you perhaps don’t realise it:
If you are charging your business for business mileage traveled in your personal car, then the 45p/25p allowance set by HMRC is designed to cover, in addition to fuel, the wear, tear, and other costs of running your car. The ‘other running costs’ bit includes the insurance costs, as well as MOTs, etc.
Can I claim the costs of lunch, coffees, etc?
Again, another good question.
It’s perhaps not as straightforward as you would like though. HMRC says “everyone must eat in order to live and such costs are normal costs of living incurred by all and not incurred for the purpose of trading”.
So, because you need to eat and drink to stay alive, it cannot be “wholly and exclusively” for the business, therefore, not tax-deductible.
There are some instances where it can be claimed, however. These are:
- If you’re staying away overnight for business. In this instance, you can claim ‘reasonable’ costs for the evening meal and breakfast.
- If you make a journey that is outside your normal pattern of business activity. So let’s say you work from home but needed to travel several hours to attend a course, the cost of your lunch would an allowable expense.
- Or, if your business, by its nature, has lots of temporary workplaces. Like a party entertainer, everyone loves clowns right? 🤡
If you have any questions about what expenses you can put through your business, please get in touch!
Just call on 01604 662670 or email firstname.lastname@example.org