For the latest information and guidance on the Service Charity Sector and the coronavirus (COVID-19) outbreak, please click here

Accountancy Tips – Expenses

In a business determining which expenses are allowable is important, as these items are included in the taxation calculation each year.

Key jargon: Tax deductible

Tax deductible items are allowable in calculating the profit of a business for taxation purposes (where profit equals income less expenses).

Deductibility: General Rule
Generally, expenses that relate to earning income in a business are tax deductible. Private items are usually non-deductible.

Dealing with Business Assets as Expenses

Costs relating to business assets are not directly allowable, and are dealt with in a different way. A record should be kept of these items, as a Capital Allowance deduction is often possible. In broad terms Capital Allowances allow for the costs of assets to be claimed. The claim may be allowed fully in one tax year or phased across several tax years.
*Remember costs for the business asset will likely hit your cash-flow all in one go!*

Record Keeping

Tracking expenses across various classifications can be useful both in terms of your own business and reporting to HM Revenue and Customs. Limited Company directors also have a requirement to keep accurate accounting records under company legislation.

To create the initial expense transaction in your accounting system, and to record this, make payment for business expenses directly from the business bank account. Any documentation such as receipts/invoices in support of the transaction should be held for six years.

Follow this link for the full article.

Our Executive Members

🚉Military veterans of every generation will soon benefit from cut-price rail travel with the new Veterans' Railcard… twitter.com/i/web/status/1…

By @Cobseo 1 week ago

The Service Charity Sector and the coronavirus outbreak

For the latest information and guidance on the Service Charity Sector and the coronavirus (COVID-19) outbreak, please click here