Expenses using a foreign account

Whether it's an expense of your UK business is nothing to do with which account you pay it out of.  The nature of the expense is all that matters. 

Or to put it another way ...

Yes

... provided the software is for use in the business, rather than privately.  You should consider whether it is capital expenditure on a fixed asset or an ordinary expense of running the business.

Using the rule established in the case of Ogilvie v Kitton back in 1908, income from self-employment outside the UK whilst UK resident is likely to be UK taxable.  Consequently, business expenses relating to that business are equally deductible under normal UK accounting rules.

As you are from the US, broadly the same net profit would be taxable for US tax purposes as it would for UK.  You may need to consider US depreciation versus UK capital allowances, depending on the nature and expected life of the software.

David Treitel | Managing Director | American Tax Returns Ltd

The Old Exchange, 12 Compton Road, London, SW19 7QD

Tel: 020 3542 6330

Email: [email protected]