Allow Or Disallow Deductions Vs Trade Profs

Question 1

New capital expenditure

Answer 1

Disallow

Question 2

Repairs and maintenance

Answer 2

Allow

Question 3

Profit/ loss of capital items on disposal

Answer 3

Disallow

Question 4

Depreciation

Answer 4

Disallow

Question 5

Pay friends/ family out of profits

Answer 5

Allow

Question 6

Sole trader drawings

Answer 6

Disallow

Question 7

Partner salaries

Answer 7

Disallow

Question 8

General provision for bad debt

Answer 8

Disallow

Question 9

Provision for non trade bad debts

Answer 9

Disallow

Question 10

Specific provisions for trade bad debts

Answer 10

Allow

Question 11

Staff entertaining

Answer 11

Allow

Question 12

Client entertaining

Answer 12

Disallow

Question 13

What gifts are allowable (3)

Answer 13

Gifts to employees

Gifts of trade sample

Gift to customers if
Conspicuous advert
Non food/drinks/tobacco
Cost <50 per customer

Question 14

What types of donations are allowable expenditure (3)

Answer 14

Small donations to local charities

Stock/ plant gifted to charities

Subscriptions to professional associations

Question 15

Parking fine incurred by employee in course of business

Answer 15

Allow

Question 16

Interest paid on late tax

Answer 16

Disallow

Question 17

When are legal costs allowable (2)

Answer 17

Renewing short lease <50 years

Legal costs of registering a patent

Question 18

Cost of registering patent

Answer 18

Allow

Question 19

Incidental costs of raising debt finance

Answer 19

Allow

Question 20

Irrecoverable VAT on disallowed expenditure

Answer 20

Disallow

Question 21

Class 1A NICs and employer pension contributions

Answer 21

Allow

Question 22

Redundancy payments in excess of 4* statutory redundancy pay

Answer 22

Disallow

Question 23

When are car leasing and rental costs disallowed

Answer 23

Any element relating to private use by sole trader

15% of lease cost if > 50g/km
110g/km if leased pre April 21

Question 24

Replacing single glazed window with double glazed window

Answer 24

Allow

Question 25

Interest received on business account

Answer 25

Disallow

Question 26

Gift aid donation

Answer 26

Disallow Then extend the bands with grossed up amount

Question 27

Servicing plan for a car used by the business

Answer 27

Allow

Question 28

Sole trader pension contributions

Answer 28

Disallow as drawings

Question 29

Trade debts written off

Answer 29

Allowable

Question 30

Increase is provision for specific bad debts

Answer 30

Allowable

Question 31

Recovery of loan to former employee previously written off

Answer 31

Disallow

Question 32

Legal fee for preparing tax return

Answer 32

Disallow

Question 33

What is allowable for a car lease of 4000, used 30% business use

Answer 33

4000*85%*30%

Question 34

Redecoration of partnership offices

Answer 34

Not allowable

Question 35

Bank overdraft

Answer 35

Allow

Question 36

Interest on loan to purchase a factory used in trade

Answer 36

Allow

Question 37

Professional fees relating to purchase of machinery

Answer 37

Disallow

Question 38

Professional fees relating to registering a patent

Answer 38

Allow

Question 39

Interest received on business bank account

Answer 39

Disallow - NTLR

Question 40

Increase in general provision

Answer 40

Disallow

Question 41

Legal fees relating to purchase of new home for sole trader which is used as 10% storage for the business

Answer 41

Disallow all - capital expenditure

Question 42

Decoration of premises

Answer 42

Allow - classed as maintenance

Question 43

Political donation

Answer 43

Disallow

Question 44

Defending action for alleged faulty goods

Answer 44

Allow

Question 45

Debt collection fees

Answer 45

Allow

Question 46

Accountancy fees

Answer 46

Allow

Question 47

Speeding fine by employee making deliveries

Answer 47

Disallow

Question 48

Rent relating to next period if you have low profits

Answer 48

Disallow

Question 49

Interest on loan taken out to fund lease of new business premises

Answer 49

Allowable

Question 50

New windows required to make building premises usable

Answer 50

Not allowable - CAPEX

Question 51

Advertisement in newspapers

Answer 51

Allowable

Question 52

Staff party for £200 each

Answer 52

£200 allowable each

Question 53

How many times above statutory redundancy payments are you allowed to deduct from TP

Answer 53

4 times

Question 54

Goodwill impairment

Answer 54

Disallow the expense

Question 55

Profit on disposal of copyright used in trade

Answer 55

Allow as a profit

Question 56

Legal cost of registering a patent

Answer 56

Allow

Question 57

Legal fees relating to new supplier contract

Answer 57

Allowable