Jennifer Adams considers whether all expenses paid for by a business are tax-deductible.
Just because an expense is paid out of a business bank account does not necessarily mean it will be tax-deductible. The general rule for all businesses is that expenses are tax-deductible if they are incurred 'wholly and exclusively' for that business. The sole purpose must be for the trade as incurred for the benefit of the business.
A typical situation where confusion may arise is where a business pays for a table at an annual charity quiz night for the industry; is this entertaining clients (not allowed), a donation (allowed), or advertising (allowed)? The answer is ‘not allowed’ as the split between business and non-business cannot be differentiated.
Travel expenses can also confuse. For example, for a sole trader or