Here is a list of certain expenses that aren’t tax deductible – but which regularly get claimed, or questioned, by clients:
Clothing
Unless it’s protective clothing, or a uniform, clothing is not tax deductible.
Spectacles
Eye tests are claimable for workers using PC’s, but the cost of glasses cannot be claimed for because they are generally not worn ‘wholly and exclusively’ for work. Safety glasses worn only at work could be an exception.
Entertaining
Entertaining potential/existing customers can be put through a business’s accounts – and reimbursed to a director/employee. If a meal out is part entertaining and part subsistence for a director/employee, it is worth calculating the split between the two.
Dividends
We sometimes get asked, ‘if I pay more dividends how much tax will that save me?’ Unlike wages and salaries, dividends are not tax deductible against a Company’s profits.
Removal costs
Removal expenses (up to £8,000) paid for by an employer can be tax deductible, but only where the employee/director is starting new work in a new area, or if the work place changes.
Grocery bills
A director/employee can claim for meals bought whilst at a temporary workplace, but food for working on site that is bought beforehand, cannot be claimed as it is not attributable to a work related journey.
Hire car and mileage
If you use a hire car in the business, you cannot also then claim the HMRC Approved mileage rates (of 45p and 25p) – because these rates are only intended to cover the wear and tear on personally owned vehicles.