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Wholly and Exclusively

What is an Allowable Expense?

Published on 26th Mar, 2021

When we look at a set of accounts or paperwork, we check that the nature of the purchases are wholly and exclusively business related.


Example- clothes for work. They can be worn outside of work, even if they are not the type you would wear eg. Suits for the office. Unless they are protective clothes, they have dual purpose.


Example - a new laptop or phone. Is it used for personal work as well as business? If so we try to reach a fair %.


Example - a back support or massage treatment to assist with the work you do. Unfortunately again this is not deductible.


Example - if you work from home and you don't have an official office area, it is not allowable to claim for decorating the room you also live in.


If a purchase has a dual purpose, we have to reach an agreement that only a % can go through, or sometimes disallow the expense.


When working on your books, we compile a list of queries if we are in doubt of the nature of the purchase, and talk through the list with the client. 


It happens -  clients purchase a personal item using their business account in error.  This can either be classed as "drawings" out of the business, or repaid back to the business.


HMRC have a really useful link below - well worth checking this out, but do not hesitate to ask us if in doubt.


https://www.gov.uk/expenses-if-youre-self-employed



Lorna


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