Which Expenses are Non Allowable for Corporation Tax Relief?

This article helps explain Non Allowable Expenses for Corporation Tax

Self employed individuals are eligible to certain reliefs including tax relief from particular expenses. For example, expenses associated with your business and the running costs can be exempt from your business income for tax purposes e.g. travel expenses, cost of stock, payroll costs. Some expenses however, such as private expenditure cannot be claimed for. This includes an expense which is both for business and private purposes

Please be aware, buying or improving capital items for you business may not be classed as a business expense for tax purposes but this may still be able to be claimed for.

These are entered in the Financial Accounts spreadsheet in the DIY Accounting Limited Company package on the Corporation Tax tab as per the below:

For small items use one of the indirect costs code "M" (Repairs & Maintenance).

For a more expensive item which holds some re-sale value you can enter it against code "FA" (A fixed asset).

As the item is not an allowable expense, either the items full value or the amount of capital allowance that was claimed for it (in the case of fixed assets) needs to be taken into consideration when calculating corporation tax....

In the "CorporationTax" tab of financialaccounts.xls add the Non-allowable expense to the "Operational profit chargeable to corporation tax. You could do this by changing the formula in K12 from "=K5+K10" to "=K5+K10+<non-allowable amount>". Or you could add a new cell to row 11 (currently bank) and change the formula in cell K12 to =K5+K10+K11.

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