Trading Income Flashcards
Unincorporated business (Sole Traders / Partnerships) (21 cards)
Capital expenditure
‘Items or expenses relating to acquiring, improving or creating a long-term asset’
Disallowable
Depreciation / Loss on disposal
Disallowable
Appropriation of profit:
Business owner’s salary
Drawings
Private element of expenditure
Payments to family
Disallowable
Movements in provisions
General - Disallowable - deducted when paid.
Specific - Allowable - deducted when in p&l.
Write-off of non-trade debts
Disallowable
Client entertaining
Disallowable
Staff entertaining
Allowable
Personal expenses of owner
E.g. Owner’s IT and NI Class 4
Disallowable
Interest on late payment of tax
Disallowable
Gifts
Disallowable
Except:
Gifts to ‘ees.
Gifts of trade samples.
Gifts to customers (advertisement, not food, drink, tobacco)
Donations to charities or political parties
Disallowable
Except:
Donations to local charities.
Subscriptions
Disallowable
Except:
Trade / professional use
Fines
Disallowable
Except:
‘ee fines incurred on business.
Legal fees of a capital nature
Disallowable
Except:
Costs of obtaining long-term finance (debt).
Costs of registering patents.
Costs of renewing short term lease (<50 years)
Employment payments
Allowable
If not paid within 9 months of end of AP - Disallowable.
Pension contribution by ER
Allowable (when paid)
Disallowable (Accruals)
Leased cars
CO2:
> 50g - Disallowance = 15% x hire charge.
< 50g - Allowable.
What should you do with your expenses when they have already been included in your tax-adjusted trading profit:
Expenses:
Allowable - Do nothing.
Disallowable - Add back.
Income:
Taxable - Do nothing.
Non-taxable - Deduct.
What should you do with your expenses when NO adjustments have been made in your tax-adjusted trading profit:
Expenses:
Allowable - Deduct.
Disallowable - Do nothing.
Income:
Taxable - Add.
Non-taxable - Do nothing.
Are pre-trading expenditure allowable?
If incurred within 7 years then yes.
FRD
Allowable.
