Business expenses as personal income deductions

Business expenses as personal income deductions

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Hi, if a director (also owner) of a company incurs some business expenses that he/she pays from a personal account, is it possible to use them as deductions for personal income tax (as opposed to deductions from business income for corporations tax)?

Thanks!

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By Manchester_man
19th May 2013 19:51

Probably not, depending on what the expenses indeed are.

The rules for allowable expenses are far more generous for a company / business than they are under schedule e (employment) where there are very few allowable expenses.

Does the company reimburse you for these expenses made?

Is the company vat registered?

Potential problems exist here - cam you provide further info?

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By vladlondon
19th May 2013 19:57

In my scenario the company is a one-man band and the person is the director and 100% owner, receiving minimum salary and the rest as dividends. The company is not registered for VAT.

 

There is a 136 page HMRC guidance for directors at http://www.hmrc.gov.uk/guidance/480.pdf, but I guess the answer might be a biut shorter than 136 pages.

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By johngroganjga
20th May 2013 07:56

The normal way of dealing with these situations is for the company to reimburse the employee and claim the expense as a deduction in its accounts.  Why is that solution not being adopted here?

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By vladlondon
20th May 2013 11:36

I know, I know. It's just in some cases it's better to show income on personal level for political reasons :) I'm trying to figure out if it's allowed this way.

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