Cash Basis - Further Expenses

Question 1

Pre-Trading Expenditure

When is Pre-Trading Expenditure an Allowable Expense?

Answer 1

If Incurred Within 7 Years Prior to Start Date of Trade.

Treated as Incurred on First Day of Trading.

Question 2

Trading Allowance

What is the Trading Allowance?

Answer 2

£1,000 Per Tax Year.

Question 3

Motor Expenses

What Does the Flat Rate Motor Expense Cover?

Answer 3

The Cost of Buying, Running and Maintaining a Vehicle.

Question 4

Motor Expenses

The Flat Rate for Cars and Vans are:

Answer 4

• 45p on First 10,000 Business Miles;
• 25p Thereon.

Question 5

Motor Expenses

What is the Flat Rate for Motorcycles?

Answer 5

24p Per Business Mile.

Question 6

Motor Expenses

What Does the Flat Rate Motor Expense Not Cover?

Answer 6

Incidental Expenses of Travel Such as Tolls or Parking Fees.

Question 7

Motor Expenses

Can the Method of Relief for Motor Expenses Change?

Answer 7

No.

For as Long as the Vehicle Remains in the Business.

Question 8

Business Use of Home

What Does This Flat Rate Expense Cover?

Answer 8

The Household Running Cost for Utilities.

Question 9

Business Use of Home

The Flat Rate Depends on the Number of Hours Worked Per Month:

Answer 9

• 25 to 50 Hours - £10
• 51 to 100 Hours - £18
• 101+ Hours - £26

Question 10

Drawings

Why are Drawings Not an Allowable Expense?

Answer 10

Drawings are Monies Taken From Business Profits to Meet the Owner’s Private Expenditure.

Question 11

Goods for Own Use

What Adjustment Should be Made Where:
* Goods are Removed in Accounting Period of Purchase?
* Relief Has Been Claimed on Goods in an Earlier Period?

Answer 11

• The Cost of Goods is Not an Allowable Expense
• The Cost is ‘Added Back’ as Additional Income