Disallowable Expenses

One of the most difficult conversations an accountant can have with a client is one where they have to break the news that the spending their client has made is not actually tax allowable.  It ends up with them

  • Bitterly paying more tax than they anticipated
  • Disappointment because they have been freely spending
  • A realisation that going self employed doesn’t have quite as many perks as they thought.

If you are new to self employment then here are 4 Disallowable Expenses that often comes as a great surprise for those starting their own businesses:

1. Travel from Home to Your Office

If you have chosen to rent an office or space from which to base yourself from then any travel between you home to your office is not allowable.

You can read more about Claiming Business Travel when You are Self Employed here.

2. Client Entertainment

It may be entirely work related but client entertainment is not tax allowable.  There are circumstance where you can buy a gift for your clients but if you take them out for a meal, even if it is to win a new contract or secure a business relationship, these costs are not tax allowable.

3. Fine and Penalties

Any fines and penalties you have to pay are not tax allowable, that includes things like:

4. Clothing

There are certain circumstances where someone who is self employed can claim for the cost of their clothing, but ‘everyday clothing’ like a business suit or shirt are not tax allowable.

You can claim for clothing if it is:

  • a uniform
  • you buy protective clothing needed for your work
  • you need costumes because you are an actor or entertainer
Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.