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Where Taxpayers and Advisers Meet

Allowable expenses query/VAT query

Smithy01
Posts:7
Joined:Wed Apr 03, 2019 9:59 am
Allowable expenses query/VAT query

Postby Smithy01 » Wed Apr 03, 2019 10:03 am

Hi Everyone,

Just have a few queries with regards to allowable expenses..

1) Just to verify... if a small business is leasing a business unit at £525 per month and is used for business only, then ALL that amount is classed as an Allowable expense?

2) Can a business claim back bank charges (eg I pay £7.50 per month to use Santander business banking);

4) are charges that are incurred when customers pay for goods by credit or debit cards (even the mobile card readers such as izettle/paypal) NOT now classed as an allowable business expense?

3) Can a business apply to be VAT registered on (a lesser Turnover) say £50k year ?


Thanks as always :) I do know most of the answers to the above questions BUT things are constantly changing nowadays hence the queries... thanks again for any replies received.

Smithy01
Posts:7
Joined:Wed Apr 03, 2019 9:59 am

Re: Allowable expenses query/VAT query

Postby Smithy01 » Wed Apr 03, 2019 10:31 am

Eg., being VAT registered would dramatically reduce my monthly rent on the business unit! On the otehr hand it would mean adding VAT on to my products which are sold to customers... swings and roundabouts I guess?!

Smithy01
Posts:7
Joined:Wed Apr 03, 2019 9:59 am

Re: Allowable expenses query/VAT query

Postby Smithy01 » Wed Apr 03, 2019 10:16 pm

Can anyone advise with my queries please? Thanks :)

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Allowable expenses query/VAT query

Postby robbob » Thu Apr 04, 2019 8:30 am

1) Just to verify... if a small business is leasing a business unit at £525 per month and is used for business only, then ALL that amount is classed as an Allowable expense?
For tax purposes yes - note there may or may not be vat billed on the rent - if the rent doesn't include vat then that rent would be more exepensive practicably spekaing than 525 including vat if you are vat registered and not using flat rate vat scheme.
2) Can a business claim back bank charges (eg I pay £7.50 per month to use Santander business banking);
Yes -for tax but note no vat to reclaim

4) are charges that are incurred when customers pay for goods by credit or debit cards (even the mobile card readers such as izettle/paypal) NOT now classed as an allowable business expense?

yes allowable for tax purposes yes - again probably very little input vat to reclaim in this regard
3) Can a business apply to be VAT registered on (a lesser Turnover) say £50k year ?
It must be irish day today - yes business can apply to be registered unless all sales are exempt sales which is very unlikely.

Note if you have standard rated sales mostly to private individuals or non vat registered business customers - then its very unlikely vat registration would be beneficial - as normally any input vat reclaims are outweighed by the vat you have to hand across on income received - if you customers are non vat registered then to provide the same service to them then 1/6 of your sales income will be handed across if prices remain unchanged - less the input vat you can reclaim.

Smithy01
Posts:7
Joined:Wed Apr 03, 2019 9:59 am

Re: Allowable expenses query/VAT query

Postby Smithy01 » Thu Apr 04, 2019 9:46 am

Thanks very much for your reply, I appreciate it :)

The rent for the business unit is £525 per month including VAT (ie., £5250 + VAT/year = £6300, so £6300/12 = £525/month Its good to know that its an allowable business expense.

I ask you the costs involved for my goods being purchased by credit and debit card as someone told me a few months ago that the costs were no longer an allowable expense? However I have noted what you have said and will ignore that advice :)

My VAT query - yes, I can see your point here. If I was VAT registered It would bring my rent down to £437/month which would be a substantial saving! However, adding 20% VAT onto my items may well lead to a general loss in sales which is the last thing I would want. Therefore perhaps best to keep away from VAT registration.

Thanks again for your time and help.
Any further input on above would be gratefully received.. Cheers

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Allowable expenses query/VAT query

Postby robbob » Thu Apr 04, 2019 1:19 pm

I ask you the costs involved for my goods being purchased by credit and debit card as someone told me a few months ago that the costs were no longer an allowable expense? However I have noted what you have said and will ignore that advice :)
it's all about context and full disclosure of all relevant information - if you link to the other article and we can advise - i would always worry if you have been advised something different somewhere else, then there may have been is a slightly different wording used or additional information made available that would result in a different answer.

an example would be is that if you are limited company trading status and use your personal card for business expenses and incurred interest on that personal card that would not generally be an allowable expense of the limited company. However do the same a sole trader and you would be fine - thats presuming your capital account isnt overdrawn and you are not using a basis of calculation that restricts interest - strewth.


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