Legal and financial costs

Accountancy, legal and other professional fees can count as allowable business expenses.

You can claim costs for:

  • hiring of accountants, solicitors, surveyors and architects for business reasons
  • professional indemnity insurance premiums

You cannot claim for:

  • legal costs of buying property and machinery - if you use traditional accounting, claim for these costs as capital allowances
  • fines for breaking the law

Bank, credit card and other financial charges

You can claim business costs for:

  • bank, overdraft and credit card charges
  • interest on bank and business loans
  • hire purchase interest
  • leasing payments
  • alternative finance payments, for example Islamic finance

If you’re using cash basis accounting you can only claim up to £500 in interest and bank charges.

You cannot claim for repayments of loans, overdrafts or finance arrangements.

Insurance policies

You can claim for any insurance policy for your business, for example public liability insurance.

When your customer does not pay you

If you’re using traditional accounting, you can claim for amounts of money you include in your turnover but will not ever receive (‘bad debts’). However, you can only write off these debts if you’re sure they will not be recovered from your customer in the future.

You cannot claim for:

  • debts not included in turnover
  • debts related to the disposal of fixed assets, for example land, buildings, machinery
  • bad debts that are not properly calculated, for example you can not just estimate that your debts are equal to 5% of your turnover

Bad debts cannot be claimed if you use cash basis accounting because you’ve not received the money from your debtors. With cash basis, you only record income on your return that you’ve actually received.