The question of expenses can be intricate. Different types of expenses have particular taxation implications. In general, expenditure that is incurred wholly and exclusively for the purposes of business is allowable for Corporation Tax.
These expenses are deducted from your company’s income and have the effect of reducing taxable profits, thereby reducing the overall amount of tax payable.
Although expenditure may be incurred by the business, there may be an element of benefit to you, the company director. This will have personal taxation implications as these items are considered by the Inland Revenue to be a Benefit in Kind.
Examples of Allowable Expenditure may include the following items.
You can claim the cost of business telephone calls, training and study, and the costs of professional books and journals. Where training is intended as a reward or offers an employee an inducement or is unrelated to the job there is no tax relief.
Generally, training courses, particularly those which may enhance your company’s income stream are wholly allowable as a tax deductible item. If any qualification you receive is incidental to the course itself and that you undertake the course to improve your company’s business prospects, and pass of course, you have no choice but to accept the qualification. If you receive a formal qualification at the end of the course you may be deemed to have received a personal benefit in kind. The case for courses as a tax deductible expense is not as clear cut as one might imagine. For VAT registered businesses, VAT is reclaimable where a receipt made out to your company, is provided by the course or training service provider