Pre-trading expenditure
What you can claim backdated to before your business started operating...
If you’ve recently set up a new business (congrats!) you’ve more than likely absorbed costs in setting up the business yourself from your own personal money and savings.
So, you’ve registered as self-employed or partnership and then what for all the costs you’ve had before that date?
You can claim back your pre-trading expenditure as far back as 7 years for allowable costs.
Allowable costs ( “wholly and exclusively for the purpose of the trade”) are effectively treated as incurred on the first day of business commencement.
Your costs may be any of these:
• Accountancy costs.
• Office rental.
• Business insurance.
• Domain names and web hosting.
• Travel costs (e.g. travelling to visit recruiters and potential clients).
• Stationery, printing, postage, etc.
Phone bills.
• Business equipment (e.g. a PC, laptop, peripheral equipment).
Also, if you decide to become a VAT registered limited company, you can claim the VAT back on those costs for goods bought up to 4 years previous and services up to 6 months previous.
There are some grey areas as to what you can claim, but most are acceptable.
Keep your records and receipts together and ready for your accountant so you can show that these were purchased for the business and most of it will be smooth and help lower that first tax bill.
Get in touch with us for any help.
