Allowable Expenses

The Costs you pay with the sole purpose of earning profits from your business are allowable expenses. This means that any cost you incur outside the due course of the business is not allowed to be considered as a business expense.

The expenses incurred may or may not include VAT on them. If it includes VAT then there are two aspects of the amount to be considered an allowable expense.

For VAT registered businesses- If you are VAT registered you will use the net amount of expense (excluding VAT) as an allowable expense, the reason being that the VAT amount is separately claimable hence its net impact on you is not of an expense.
If you are not VAT registered, use the gross amount (including VAT) of expense as an allowable expense.

Capital expenses:

Capital expenses are usually subject to the capital allowance where you use the items over several years.
You can claim capital allowances on items that you cannot claim as allowable expenses e.g Plant and Machinery, Furniture and Fixtures.

A detailed list of allowable business expenses can be found at

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