Allowable Expenses for the SME business ownerA business can claim relevant revenue expenses incurred to earn a profit in any given year..Some tips on allowable expenses

Revenue expenses are distinguished from capital expenditure which is written off (allowed tax relief) over the lifetime of an asset.

Revenue expenditure typically includes:

  • Purchases of trade stock; overheads such as rent, rates, repairs, light & heat; motor & travel running costs; professional fees; finance interest on banking loans; lease payments.

Disallowable expenditure (for tax purposes) includes private expenses and client entertainment. Staff expenses are allowable. (*For a company owner it is still prudent for the company to incur personal element of expenses, and add back in company tax computation, rather than incurring the expense from their own after tax income).

Travel & Subsistence:

  • Allowable Travel expenses covers travel in the course of work but not including travel to and from work on daily basis.
  • For a sole trader this can be calculated from receipts incurred and apportioning between business and private use in the annual tax return.
  • For director and employee expense payments, best advice is to follow the standard rate per Kilometer allowances as per annual mileage and car engine (as detailed on Revenue Commissioners website).
  • Subsistence expense payments regarding expenses incurred in business journeys are also allowable at Revenue daily rates.
  • Travel and Subsistence payments are tax deductible by the business and are free of income tax regarding the employee/director recipient.

 Working From Home:

  • Utility bills may be apportioned on a justifiable basis and the business portion claimed as an allowable expense in computing tax returns.

This article contains general advice only. For further advice regarding claiming all allowable expenses in your business, call Ultan McCarthy of McCarthy & Co on 01 444 5260.