New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

Landlords TaxProperty TaxLandlords Tax ReturnsLandlords AccountsProperty Tax ReturnProperty AccountsLandlords FinancialLandlords AccountantTaxTax ReturnsVATChartered AccountantsOnline AccountantOnline BookkeepingOnline Tax ReturnsYour Online AccountantYour Online BookkeeperBusinessadviceHMRCAccountingNICSDLTDividendsExpensesFHLsPropertyCashflowInvestment Property TaxPAYEProperty AccountantSmallbusinessTax ImplicationsTax ReliefBusinesstipsCapital Gains TaxCgtFurnished Holiday LettingsIhtexemptionsIncome TaxInheritance TaxSole TraderTaxplanningCapital gains tax propertyGiftsHoliday Lets TaxISALandlord RepairsPensionProperty bookkeeperProperty LettingReliefTaxreturnVAT invoiceAgricultural Property ReliefAllowable Business ExpensesAnnual Exempt AmountBad Debt Tax ReliefBADRBenefits in KindBusiness ExpensesBusiness RateBusiness tipsCapital AllowancesCapital GainsCashbasisChild BenefitCommercial PropertyComplianceDeductibleexpensesDirectors LoansDisincorporationEmployment AllowanceFinanceFinancialmanagementFlat Rate SchemeHMRC complaintsLettingsMaking Tax DigitalMakingTaxDigitalMileage AllowanceMobilephonesMTDMTD UpdateNational InsuranceOverlapreliefPartnershipPartnershipbusinessesPayrollingPprProperty Company TaxProperty Tax Deductible ExpensesPropertyallowanceReimbursedexpensesRent a Room ReliefRentalResidence ReliefResidential property gainsSelfemployedSmall BusinessStamp dutyTax free incomeTimetoPayWorking from home60 day capital gains limitAbolitionclass2AccrualsbasisAcquisitionsADRAdvisoryfuelratesAIAirBnBAlphabet sharesAmapAnnual Tax on Enveloped DwellingsAppealAPRArtificial intelligenceAssessmentAsset disposalAssociated CompanyAssociated Company Tax RulesAutumnstatementBad DebtBaddebtsBadgesoftradeBeancounterBenefit ReliefBreakeven PointBudgetBusiness adviceBusiness asset defermentBusiness coachBusiness ContinuityBusiness EntertainmentBusiness RatesBusiness Rates ReliefBusinessgrowthBusinesstypesBuy or Lease EquipmentBuytoletCapital Allowances for CarsCapital GainCapitalallowancesCapitalexpenditureCar Capital AllowancesCarry Back LossesCashChange of Tax BasisChatGPTCIS SchemeClass 2 NICClass 3 NICCommon TenantCompanies ExpenditureCompanies HouseCompany Account DeadlinesCompany Account FilingCompany Strike OffCompany Tax Efficient PropertyCompanyassociationCompanyloanstaxfreeCompulsory Strike OffConstruction Industry SchemeContacthmrcContentmarketingContributionsCorporation Tax LossesCorporation Tax New RegimeCorporation Tax RatesCorporationTaxCostsCryptocurrencyCustomerlistimplicationsDeductible Business ExpensesDeductionsDeferring NICDemergerDepreciationDevelopmentDirectorsDirectorsloansDisallowable Business ExpensesDiscoveryDisposalsDispute ResolutionDividend allowanceDividend Allowance ReductionDividend PlanningDividendallowanceDLADomestic Items Tax ReliefDormantcompanyEISEmployee DiscountEmployee managementEmployeecompensationpaymentsEmployeeOwnershipTrustEmployers NICEndoflifeplanningEnquiryEnterpriseResourcePlanningEntertainmentEntrepreneurmindsetEquityExpenses Allowed For TaxExtrabenefitEyetestsFlippingFurnished Holiday Lets TaxGift AidGift AllowanceGrowthhacksHelp to pay tax billsHICBCHMO Licensing FeesHoldoverreliefHoliday Lettings TaxHome responsibilities protectionHow to apply for a Business LoanHow to Extract ProfitHumourHybridIllegaldividendsIncomeIncome and GainsInflationary GainsInfluencersInheritance Tax Nil Rate BandInterestInterest RatesInterestreliefInterestrestrictionInvoicingIR35Joint TenantKeypersoninsuranceLandlords Self AssessmentLate vat registrationLBTTLeadgenerationLeadmagnetLeanbusinessmodelLendingLetting Agent DisbursementsLetting Agent RecharresLettings ReliefLifetime LimitLimitedcompanyLiquidation DemergerLoanLoaninterestLong Lets TaxLongserviceLTTMainresidencereliefManaged LetsManagement accountingMaritalhomedivorceMarriage allowanceMarriageallowanceMileage paymentMinimumwageMixedusesdltMortgage costsMortgage Interest ReliefNew propertyNewcompanycarfuelratesNewnicrulesNIC 2023 to 2024NIC savingsNicdisregardNicreductionNMWNmwerrorsNon Allowable Business ExpensesNon-taxableNudgeletterOptiontotaxvatOverpayment ReliefOverseas propertiesPaperformPartnership schemesParttimePatternofoccupancyPAYE by Direct DebitPayrollPenaltypointsPension Payments Tax ReliefPensioncontributionsPensionsPerformance-reviewsPeriodofgracePeriodsofabsencePersonal AllowancePersonal ExpensesPersonal financePersonalallowancePersonalguaranteesPostcessationreliefPretradingexpensesProfitProfit-and-lossProfitAndLossProperty AllowanceProperty Development CompanyProperty IncorporationProperty Investment CompanyProperty investor accountsProperty investor tax tipsProperty Rental BusinessProperty TradingPropertycompanyPRRR40ReceiptsRecharges by Estate AgentsRefundRegularpaymentsRent your driveRentaroomResearch & DevolopmentResidentialsdltRetail stock controlRetainedprofitsRevenueRoom for rent taxRtiSASalarySalary SacrificeSavingsSDLT changesSection 455 TaxSection455taxSelective Licences LandlordsSelf AssessmentSelf-employednicSelling OnlineSelling your CompanySeperationServicechargesSettlementslegislationSimplified ExpensesSmallbizSmallbusinessratereliefSoftwareSpring BudgetStaffpartiesStarting a businessStudent Loan DeductionsSuccessJourneySurplus CashTax Allowance on DrivewaysTax AllowancesTax billTax BreakTax CodesTax DeadlinesTax DeductionsTax Filing DeadlinesTax Free ChildcareTax on Company VansTax positionTax RefundTax tips for landlordsTax-free savings incomeTaxbillpaymentsTaxconsequencesTaxincentivesTaxpositionTaxpositionassetsTaxreliefTaxreliefsTaxsesTerminationpaymentsTipsTrade professionalTrading lossesTrainingTransfer AssetsTransfer Assets Between SpousesTravelUmbrellacompanyUndisclosedincomeUnpaid RentVAT Bad Debt ReliefVAT DeadlinesVAT DisbursementsVAT flat rate schemeVAT PenaltiesVAT registrationVAT Reverse ChargeVatpenaltiesVatregisteredVatregistrationthresholdWellbeingYear End
TAGS

Relief for pre-trading expenses

Relief for pre-trading expenses

In setting up a trade it is inevitable that expenses will be incurred before the trade actually commences. Expenses may be incurred on acquiring premises and kitting them out, on buying stock, on office supplies, on professional advice, on marketing, on software, on setting up a website, on legal fees and suchlike. These can mount up, so it is important to secure tax relief where possible. Relief for pre-trading expenses is available to both unincorporated business and companies.

Relief is only available to the person (individual or company) who incurred the expenditure and commenced the trade.

Revenue expenses

The general rule is that revenue expenses incurred in the seven years prior to the date on which the trade starts are deductible if they would be so deductible had the expense been incurred once the trade had commenced. The usual rules to determine whether an expense is deductible apply (i.e., whether it is revenue in nature and incurred wholly and exclusively for the purposes of the business). To give effect to the relief, the pre-trading expenses are treated as if they were incurred on the first day of trading and deducted in calculating the profits for the first accounting period.

Capital expenses

Relief for capital expenses depends on whether the accounts are prepared on the cash basis or not. Where the cash basis is used, if the expense is one that would be deductible under the cash basis capital expenditure rules, as with revenue expenses, the expense is treated as incurred on the first day of trading and deducted in calculating the profits for the first accounting period.

However, if relief would be given through the capital allowances system, capital allowances are available for the pre-trading expenditure, the expenditure being treated as if it had been incurred on the first day of trading.