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Business Tax Insider
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Business Tax Insider is aimed at business owner. Small, medium or large - it doesn’t matter - this monthly business tax saving magazine will help you to slash your taxes.
- How to Use Dividend Waivers to Save Tax(December 2010)
- How to Save Tax with an ‘EFRBS’(September 2010)
- Tax Savings for Entrepreneurs(September 2010)
- How to Buy the Trade and Assets of a Business Without VAT(August 2010)
- Fighting Property Values with HMRC(August 2010)
- How to Claim Relief for Trading Losses - And Don’t Forget Class 4 NIC!(August 2010)
- A “Business” is Better!(July 2010)
- Non-Dom ‘Loopholes’ – Bringing Money Into The UK Tax Free(July 2010)
- Using Your Own Car for Work(June 2010)
- Tax Relief Boost for Business Owners(May 2010)
- Can I Claim for Expenses Incurred Before Starting Up My Company?(September 2011)
- What Costs are Allowable as Pre-Trading Expenditure?(September 2011)
- Do My Partner and I Have to Split Profits 50:50?(September 2011)
- Am I Eligible for a Tax Refund?(September 2011)
- Can I Use My Daughters’ Personal Allowances?(September 2011)
- Am I Still Liable for Capital Gains Tax or Will I Be Treated Like a Property Trader Who Pays No Capital Gains?(August 2010)
- Will We Pay Tax on Rental Income?(July 2010)
- Do You Pay Tax on Non-Refundable Deposits?(October 2009)
- How Can I Avoid Paying Council Tax on my Empty Property?(September 2009)
- What Costs Can I Claim For?(September 2009)
Can I Claim for Expenses Incurred Before Starting Up My Company?
I am in the process of getting things in place to start my own business and have a number of items already that I can use which were bought a few years ago. Can I use these (to save on paying out again for something already in my possession) and claim them back against my income tax in my first year trading? As they were bought about 3 years ago (before I considered turning a hobby into a business) I no longer have receipts for these items. Can I still claim the expense back?
Arthur Weller Replies:
Have a look in the HMRC Business Income Manual at pages BIM46351 and BIM46355:
You can see that if revenue expenditure is incurred within seven years of starting the trade, it can be claimed on the day trading started, if it would have been allowable if incurred after trading had started. However it seems to me that you are asking about capital expenditure, which is specifically excluded from this treatment, if you look there. It appears to me that the correct treatment is to calculate the market value of the assets on the day you started trading and introduced them into your business (which may be somewhat less than three years ago when you originally purchased them), and calculate capital allowances accordingly.
If you are asking about revenue expenditure, I would still use market value of the items on the day you started trading. This situation is not the same, but nevertheless very similar, to that which can be found in the HMRC Employment Income Manual pages EIM21660 and EIM21661:
Here it explains that if the taxpayer charges the business more than the market value for the introduction of an asset then the taxpayer is subject to income tax on the difference.
- Don’t Expect HMRC to Help You(April 2010)
- When to Consider the VAT Flat Rate Scheme(January 2010)
- Transport Capital and VAT Allowances(November 2009)
- How to reclaim VAT (insider tip)(June 2009)
- Are you the “senior accounting officer” of a large company?(May 2009)
- Do you believe in using “green” technology wherever possible?(May 2009)
- HMRC puts live podcasts to help you business(March 2009)
- Claiming the VAT Back on Legal Costs(January 2009)
- Do you have 50 or more employees?(December 2008)
- Who is going to pass on the VAT rate cut?(December 2008)
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