It might seem fairly obvious that you can claim any expenses associated with the business, but it is not always quite that straightforward, and you might be missing some. The Revenue rules are that the expense must be
“wholly and exclusively”
for the purpose of the trade. This is defined in case law and the Revenue will look at whether they expense enabled the person to “carry on and earn profits” and also the “motive” for the expenditure. Some expenses are clearly for the business:
- Direct costs and purchases which would include any goods or services bought which are subsequently sold on to customers. The costs of changing them will also be included for example a manufacturing or carriage cost.
- Rent of premises – a unit on a trade park is unlikely to have any non-business element. If you work from a part business/part personal premises including domestic home there are separate rules which will be covered in a separate article.
- Office costs – stationery, postage all allowable for the business
- Advertising – allowable for the business
- Telephone – dedicated business lines and mobile phones for employees all allowed. Only business call costs are allowed if from a non business line.
- Subscriptions and publications – only for business purposes, ie trade memberships and journals
- Travel costs – specific business travel is allowed but not commuting to a regular workplace even if you work from home.
- Food – not generally allowed as you need food to live, not just for business
- Entertaining – while this is a business expense and should be recorded as such it is specifically disallowed for tax purposes
- Motor expenses – for company vans all treated as business, car costs deserve a separate article
- Professional fees – accountancy and legal fees generally allowable in full unless related to long term property rental or purchase.
The above list gives a picture of the types of expenses that can be claimed, but if you are in any doubt you should seek professional advice or speak to the Revenue.
Alastair Wood, AW Accounting “speaking your language”