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TC > Trading Profit - Allowable Expenses > Flashcards

Trading Profit - Allowable Expenses Flashcards

1
Q

Capital Expenditure

A

Disallowable - (will be deducted under capital allowances)

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2
Q

Repairs

A

Allowable - Revenue expenditure

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3
Q

Appropriation of Profit

A

Disallowable

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4
Q

Salary to sole trader

A

Disallowable

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5
Q

Sole trader pension payments

A

Disallowable

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6
Q

Sole trader tax liabilites

A

Disallowable

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7
Q

Salary to family members

A

Disallowable if excessive and no work done

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8
Q

Depreciation

A

Disallowable

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9
Q

Trade Bad Debts

A

Allowable

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10
Q

Specific Provisions

A

Allowable

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11
Q

General Provision

A

Disallowable

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12
Q

Staff Entertaining

A

Allowable

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13
Q

Gifts to employees

A

Allowable

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14
Q

Gifts of trade samples

A

Allowable

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15
Q

When are gifts to customers disallowable?

A
  • Incorporate conspicuous advertisement
  • Are not food/drink/tobacco
  • Are not vouchers
  • Less than £50 per customer
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16
Q

Local charity donations

17
Q

Stock/plants gifted to charities or UK educational establishments

18
Q

Subscriptions to trade and professional associations

19
Q

Employee parking fines

20
Q

Interest on tax payments

A

Disallowable

21
Q

Overdraft Interest

22
Q

Legal fees and professional fees relating to Capital

A

Disallowable generally

23
Q

What is considered a short lease?

A

Up to 50 years, allowable if its a renewal

24
Q

Costs of registering a patent or copyright for trade use

25
Q

Costs of raising long term finance

26
Q

Legal and professional fees relating to trade

A

Always allowable

27
Q

Irrecoverable VAT

A

Only disallowable if relates to disallowable expenditure

28
Q

When are employment payments disallowable?

A

Amounts exceeding 3 x statutory redundancy pay on cessation of trade

29
Q

What amounts relating to leased cars are disallowable?

A

15% of hire charge if more than 50g/km emissions

30
Q

How should goods taken for own use be accounted for?

A

If nothing recorded: add back selling price
If entered at cost: add back profit
(Should be increasing profit as they need to pay tax on it)

31
Q

Rental Income

A

Deducted from trading profit - will be taxed under a separate line in the pro forma

32
Q

Non monetary consideration

A

Add the value to trading profits

33
Q

Is there a work from home deduction?

A

Yes - a monthly deduction based on monthly hours worked from home, see hardmans

34
Q

Business mileage

A

Only allowable up to a certain limit - anything else should be deducted

35
Q

When is pre-trading expenditure deductible

A

If it occurred within 7 years of the starting date.

36
Q

entertaining customers

A

disallowable

TC (9 decks)

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