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A non-deductible expense is an expense that you can’t subtract from your income when you’re doing your Self Assessment tax return.
In simpler terms, you can’t use it to reduce your tax bill. Usually, it’s fairly straightforward what classes as a business expense, and what doesn’t, but the line is not always so black and white.
One of the benefits of being self-employed is that you can deduct certain business expenses from your overall tax bill. However, it’s not always obvious which expenses are deductible and which are non-deductible. Plus, HMRC is very strict on what is classed as an allowable expense.
The general rule of thumb is that it must be incurred ‘wholly, exclusively and necessarily’ in the performance of your business. This means that you have to be able to prove that it’s a business expense so you can deduct it from your tax return.
To give you an idea of what you can and can’t claim as an expense on your tax return, take a look at the list below. First, here are some examples of non-deductible expenses:
Some things you use for your business, such as a mobile phone, you might also use for personal use. That’s why you may have to work out the part of that item that is a non-deductible expense. For example:
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