interest and charges up to £500, for example interest on bank overdrafts.things you use in your business, such as machinery, computers, vans.day to day running costs, such as electricity, fuel.Money you owe isn’t counted until you pay it.Įxamples of allowable business expenses if you’re using cash basis are:
Only count the expenses you’ve actually paid. In practice, this means your allowable expenses reduce your Income Tax. ExpensesĮxpenses are business costs you can deduct from your income to calculate your taxable profit. You can choose how you record when money is received or paid (for example the date the money enters your account or the date a cheque is written) but you must use the same method each tax year.Īll payments count - cash, card, cheque, payment in kind or any other method. Do not record this income for your 2016 to 2017 tax return, but instead for 2017 to 2018. You invoiced someone on 15 March 2017 but did not receive the money until 30 April 2017.