Self-employed

Question 1

Disallowable / allowable items

Withdrawal of funds (appropriations)

Answer 1

Disallowed: interest payable to owner, salary for a sole trader/partner, private portion of expenditure, excessive salary payments to sole trader’s family

Allowable: interest on business overdraft, business expenses, salary at market rate

Question 2

Disallowable / allowable items

Capital expenditure

Answer 2

Disallowed: depreciation, loss on sale of NCA, amortisation of lease, improvements, cost of initial repairs to make an asset usable, fees associated with capital/purchases

Allowable: Capital allowance instead of depreciation, repairs

Question 3

Disallowable / allowable items

Entertaining and gifts

Answer 3

Disallowed: entertaining suppliers, gifts (food, drink, tobacco are never allowed)

Allowable: entertaining staff, gifts which aren’t food/drink/tobacco, gifts of business samples to advertise to public

Question 4

Goods taken for own use (what value is the person taxed on)

Answer 4

Taxed on selling price