expenses question - The Book-keepers Forum (UK)

lor · Guru

expenses question

Dustin57 · Senior Member

Hi Lor

For the expense to be allowable it must have been incurred wholly and exclusively for the purpose of the trade. The suit could also be used for personal use, and therefore has a dual purpose. Because it has dual prupose it won't be allowable and therefore the self-employed person can't reclaim it back. The same would apply for shoe repairs, unless they are steel toe capped boots worn by builders.

Unless the motor vehicle is an asset of the business you cannot claim any expenses relaying to it. However you could claim mileage to cover the fuel and general wear and tear, but not specefic expenses.

Hope this helps!

littlebookkeeper · Senior Member

Hi Lor,

yes I would agree with the dual purpose for the suit and shoes so you can't really claim that.

Regarding the car though, why is it not an asset of the business if it is used exclusively for it? It can be introduced to the business at its estimated value if it is that it only recently started to be used just for the business. If not then I agree only a mileage allowance can be claimed.

Carole

gerry · Senior Member

HI Lor

I agree with the others about the clothing. Clothing can be expensed through the business if it for safety reasons or if it includes the company logo, a suit and shoe repairs in your case do not come under this.

I have a similar case with the car used for company business only, I will be introducing this into the business as an asset but will need to get it valued, i was informed by the IR that a guess value by the owner is not acceptable. Once this is done you can use the actual cost system and also claim the capital allowances in the first year.

Gerry

BackOfficeGroup · Guru

I agree with the clothing issue - no claim unless it is soley used for the business

With the car though, if self employed not Ltd, can you not enter all expenses for the car as at the end of the year, you will disallow say 15% for personal use on the SA? It does not have to be an asset unlike an Ltd where things get more complex and I would only claim the mileage allowance etc to avoid this.

P

lor · Guru

Thank you for your replies, so what you are saying is that, unless the car is an asset to the business then they cannot claim any expenses apart from wear and tear?

What is the general amount for wear and tear?

Its just that the client does a lot of travelling as she is a sales rep, the car is her's but it is only used for business use.

lor · Guru

perhaps i should suggest putting as an asset, she is self employed in her first year trading. I wasn't sure as this would arise to capital gains, would this be the best option?????????????

BackOfficeGroup · Guru

Lor

Can you confirm if the client is sole trader or is Ltd please. Ta.

P

lor · Guru

She is a sole trader

lor · Guru

the client has also said that she uses all the fuel put in the vehicle for her business travel to and from clients, am I correct that I need to put through total amounts of all the receipts through?????for tax purposes etc.....

BackOfficeGroup · Guru

Lor

I would just put all the receipts through and at the end of the year, make an adjustment on the SA. But if she uses the van soley for business and can show this, then you would not need to make any adjustment. You could also out the car on the balance sheet.

P

lor · Guru

Thanks for your replies.

P - am I right that I can only put through car repairs only if it is an asset, otherwise this is not an allowable expense? I want to be 100% clear.

farmergiles · Veteran Member

For bookkeeping purposes I would put through ALL expenses relating to the car, this enables you to keep track of the cash. When it comes to the year end I would work out the mileage allowance for the year. This is invariably more than the cost of fuel, repairs and insurance combined. I wouldn't make the car an asset of the business, not worth it. Maybe worth your client keeping a logbook to cover her mileage. If not, there are formulae you can use to work out the mileage allowance for the year.
Although the client maintains that she only uses the car for business, I would still show an add-back for private use at the year end. The revenue will not accept that the car is not used for private use. They will say that if you stop off to buy groceries etc whilst out on business, that is classed as private use. Therefore avoid the possibilty of a Reveneue challenge and ALWAYS show the addbacks. especially on the TR.
Also don't forget to show addback for phone use, both landline and mobile.

lor · Guru

I have put through a yrs worth of receipts, what would you say would be an appropiate % as personal usage?....i'm thinking about 10%.

farmergiles · Veteran Member

It depends on the client and their history. I would normally add back 20% as this would normally still show a mileage allowance of more than the actual costs.

lor · Guru

thank you Farmer Giles.

newstarter · Member

Hi everyone,

I think this thread is suitable to another post that I recently put through.

Could someone just please confirm that when doing the bookkeeping for the sole trader, ALL motor expenses are calculated giving a total then a % is deducted for personal allowance.
THEN, you do the business miles travelled in the year x 40p per mile and whichever is the highest (ie the total costs less the personal allowance % or the total of the 40p per mile) this goes through the accounts ??

For eg, if all the motor costs for the year come to £1000 (after the personal deduction) and the mileage allowance comes to £1200, the £1200 goes through the books and the client can take £200 from his business to cover the difference (as he has already forked out for all the fuel) ?

I would greatly appreciate it if someone could set me straight on this.

Thanking you in advance.

Richard

Shamus · Forum Moderator & Expert

Hi folks, this one was a slightly different situation involving a hire car and private fuel and mix up between mileage allowance and expensed motoring costs.

For anyone reading this later the link to the other thread is

http://www.activeboard.com/forum.spark?aBID=106474&p=3&topicID=34062727

kind regards,

Shaun.

Peasie · Expert

Can I bring this back to the start of the thread.

Are people saying because something CAN have a dual use then it cannot be an allowable expense? What about say for instance a printer copier bought solely for business use and used solely for the business? This COULD be used for personal use - you could use it to print stuff off the internet. Or photocopy personal items. This would make it have a dual use. Or a filing cabinet? You could use it to store anything. Why are clothes any different? If I have never wore a suit before and I only used it for business purposes why should this be treated any differently?

Shamus · Forum Moderator & Expert

Ahh, but your looking at it the wrong way Peasie.

you wouldn't be able to print work documents without a printer so it is wholly necessary that you have one but you would be able to attend work without a suit.

Social expectation and business etiquette may dictate that a suit is necessary but there is no statute to state that you must wear a suit.

Therefore the wearing of the suit is for your benefit (so that you win business or do not get fired) rather than necessary to do your work.

Work clothes such as safety wear, fireproof clothes, overall's, goggles, steel capped boots, etc. are allowable because statute is in place that forbids on health and safety grounds people from attending sites where they are not wearing them. This makes them wholly and necessarily purchased for work.

Generally the rule is that if you cannot by statute or physical necessity perform your job without it then it's allowable.... So you can bet your little cotton socks that there's a bit of statute that states that suit's for MP's are compulsory work wear without which they would not be allowed to enter the chamber.

That is one seriously worrying picture that you've adopted there Peasie!

All the best,

Shaun.

Peasie · Expert

Shamus wrote:

That is one seriously worrying picture that you've adopted there Peasie!

Everyone else was having pictures of cats and dogs - so I thought I'd use a picture of Claire, (I hope there is no-one called Claire that uses this forum).