trading income

Question 1

is capital expenditure allowable?

Answer 1

not allowable for calculating taxable trading profit, but may be allowed for CGT

Question 2

is depreciation allowable?

Answer 2

no

Question 3

is loss on sale of fixed assets allowable?

Answer 3

no

Question 4

is cost of capital assets allowable?

Answer 4

no

Question 5

are costs of improvements/enhancements allowable?

Answer 5

no

Question 6

is capital expenditure included within legal and professional fees allowable?

Answer 6

no

Question 7

are repair and maintenance allowable?

Answer 7

yes

Question 8

are repairs and maintenance allowable using more current materials e.g. single to double glazing?

Answer 8

yes

Question 9

are trade/professional association subscriptions allowable?

Answer 9

yes

Question 10

are donations allowable?

Answer 10

yes if it’s a small donation to a local charity
yes if it’s gifts of stock/assets to local charities and schools
no if it’s to national charities
no if it’s to political parties

Question 11

is a gift of trade samples to customers allowable?

Answer 11

yes

Question 12

are gifts to customers allowable?

Answer 12

no, unless:
cost <£50 per recipient per year
not food, drink, tobacco, vouchers exchangeable for goods
carries an advertisement for the business

Question 13

are gifts to employees allowable?

Answer 13

yes

Question 14

what is the limit for allowable gifts to employees?

Answer 14

none

Question 15

are legal and professional fees allowable?

Answer 15

yes, if they are incurred for the purposes of the trade, for example legal fees chasing debts and charges incurred in defending the title to fixed assets

Question 16

are fees / costs of obtaining long term debt finance allowable?

Answer 16

yes

Question 17

is the cost of registering patents allowable?

Answer 17

yes

Question 18

is the expense of renewing a short lease allowable?

Answer 18

yes, but the legal expenses incurred on the initial granting of the lease are not

Question 19

are the costs of hiring plant and equipment allowable?

Answer 19

yes, unless car ….. 15% disallowable with CO2 emissions above 50g/km

Question 20

are fines allowable?

Answer 20

no, unless it’s incurred by an employee whilst on work business

Question 21

is irrecoverable VAT allowable?

Answer 21

yes, if it relates to allowable expenditure

Question 22

is interest on late paid tax allowable?

Answer 22

no

Question 23

is interest on borrowings for the purpose of the trade allowable?

Answer 23

yes

Question 24

how much is the trading allowance and when is it used?

Answer 24

£1,000
used when allowable expenses < £1000, then the trading allowance can be deducted instead of the expenses