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Business Income (Expenses (Payments contrary public policy (Disallowed…
Business Income
Allowable Expenses Not Charged
Trading element of short lease premiums paid
Lease Premium Less
Relief( 2%× Premium ×(n-1)
Private residency used for business purpose
Business Calls from private telephone
Expenses wholly and exclusively for trade - from private fund of owner
Expenses
Payments contrary public policy
Disallowed
Parking fines of director,ST. & Partner
Illegal payments
Fine or penalty
Allowed
Parking fine of employees
Entertainment
& Gifts
Allowed
Entertainment/Gift to employees
Entertainment/Gift to customers
Condition
Purpose of advertisement
Not exceed £50 p.a
Not in form
Disallowed
Entertainment/Gift to any other party
Appropriations
Disallowed
Provisions (Except: Bad debts)
Salary/interest on capital - owner
Depreciation/amortization
Private expense
Income tax/NIC payment of Sole Trader/Partner
Excessive salaries by Sole trader to Spouse/ relatives
Subscriptions & Donations
Allowed
Trade and professional subscriptions
Donations to local charities (purpose advertisement)
Disallowed
Donations to political parties
Donations and national charities
Donations to charities under Gift Aid Scheme
Impaired Debts
Allowed
Trade debts written off
Provision for Bad debts
Disallowed
Loan to employees written off
Interest
Allowed
Interest paid on trading loan
Disallowed
Interest paid on non-trading loan
Legal and professional Charges
Disallowed
Charges relating to capital & non-trading
Allowed
Charges directly related to trading
Capital
Expenditure
Allowed
Registering Patent & trademarks
Cost incurred in acquiring loan finance
Revenue expenditure
Disallowed
Capital Expenditure
Other
deductions
Allowed
Actual employee earnings are paid
Pre- trading expenditure (within 7yrs)
Employee temporary transfer to a
charity of an educational institute
Patent Royalities
Disallowed
Car lease Cost
Emits > 130 g/km
15% of lease cost
Income
Allowed
Drawings
Patent royalities
Disallowed
Capital Recipts
Income taxed in another way
Income exempt from tax
Badges of Trade
(SOFIRM)
The
frequency
of transaction
The circumstances/
reasons
for sale
The length of
period
of ownership
Supplementary work, improvement and
marketing
Subject
matter
of the the transaction
A
profit
motive
Calculation
Adjustment of profits
Add
Disallowed Expenses
Allowed Income
Less
Allowed Expenses
Disallowed Income
Calculation of capital allowances
Applying bases rule