Income tax rules

Question 1

What is an Allowable expenditure

Answer 1

Incurred for trading purposes and makes taxable income smaller. Disallowable makes bigger

Question 2

write-off of trade bad debts

Answer 2

allowable but non-trade bad debts is disallowable and should be added back

Question 3

Expenditure on capital assets

Answer 3

not included in taxable profit EG depreciation, improvements

Question 4

Allowable donations

Answer 4

small to local charities and gift of stock too schools

Question 5

disallowable donations

Answer 5

donation to national charities and political parties

Question 6

expenditure on entertaining

Answer 6

Staff- allowable
Client- disallowable

Question 7

Gifts

Answer 7

under £50 OR to employee is allowable

Question 8

expenditure on legal and professional fees

Answer 8

allowable if used for trade EG chasing debts or defending title. If related to cap expenditure it is disallowable

Question 9

Rules for leasing a car

Answer 9

if over 50g/km, 15% times CO2 emissions

Question 10

Fine

Answer 10

generally disallowable but if parking fine incurred by NOT owner then allowable

Question 11

interest on borrowings for trade

Answer 11

allowable