| Item | Deductible Against Profits | Not Deductible |
Normal business expenses generally | Expenditure incurred wholly and exclusively in the course of business | Personal expenditure and all entertaining except staff |
Capital items (i.e. items expected to be used for more than 2 years) | An annual capital allowance is available on most items of equipment | Freeholds and long leaseholds of most non-industrial premises |
Computer software | If bought separately from hardware | Otherwise, capital allowances available |
Gifts to customers | Gifts costing up to £50 and bearing the business name | Any item of food, drink or tobacco |
Home expenses | Reasonable proportion of home running expenses, depending on he extent of use of home for business | Domestic expenses not related to the business |
Telephone bills | Business proportion based on calls | Private element and home line rental |
Motor expenses | Business proportion based on mileage | Private element |
Travel expenses | Business travel | Travel between home and normal place of business |
Subscriptions | Professional subscriptions, relevant magazines and journals | No-business related subscriptions |
Wages and salaries | Staff (including family where duties genuinely carried out) | Proprietor’s own drawings and gratuitous wages to family |
Bank charges and interest | Charges on business accounts and business related loans | Interest for personal overdrafts and loans |
Other interest | Interest on business loans | Interest on income tax paid late and interest paid to proprietors |
Insurance | Business related policies | Life assurance, self-employed NI, health and sickness insurance |
Bad debts | Specific bad debts from business transactions | General provisions and debts written off voluntarily |
Accountancy fees | Normal business related fees | Costs of unsuccessfully defending an HM Revenue & Custom investigation |
Legal fees | Most business related advice | Partnership agreements, company formation, property acquisition and renewing long leases |
Personal expenditure | Modest subsistence expenses in certain cases when working away | Lunches, private expenses and bills, gifts, clothing (unless a uniform) |
