Non-deductible

A non-deductible expense is an expense that you can’t subtract from your income to reduce your Self Assessment tax return bill. It’s usually pretty straightforward to work out what qualifies as a business expense (for example, renting your office or buying equipment), but some expenses can be more of a grey area. HMRC is very strict on what qualifies as an allowable expense.

Listed below are are some examples of non-deductible expenses:

  • Meals and drinks for yourself
  • Client entertainment, such as dinner, coffee or drinks. You can however, claim on entertainment expenses for your employees if you run a limited company
  • Customer gifts
  • Donations (unless they’re contributed via Gift Aid)
  • Legal fees related to the issue of share capital, or matters of capital items (equipment or  property)
  • Fines and penalties such as parking tickets
  • The cost of buying a car (unless it qualifies for capital allowances)
  • Travel costs between home and workplace

Some things you use for your business, such as a mobile phone, you might also use for personal use. That’s why you may have to work out the part of that item that is a non-deductible expense. For example:

  • Let’s say that you bought a laptop for your self-employed work
  • But you’re also using it for your own personal use about 50% of the time
  • The ‘personal use’ is considered non-deductible, and therefore, you can only claim 50% of the cost in your Self Assessment tax return

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