Private Expenditure: business expenditure

Which is which - and why it matters!

It matters because some expenses are tax deductible, and others are not.

Expenses that are wrongly treated mean the tax liability is misstated - and that makes it a priority area for HMRC.

HMRC compliance

HMRC believes that failure to get the classification between private and business expenditure right is a major contributor to the small business tax gap. Small in this context is a business with anything up to 20 employees, with turnover below £10 million. One of HMRC’s key worries is that smaller businesses can lack ‘clear financial boundaries between their business and personal or family life’, and HMRC has recently published research that seems to support this.

Download our free guide Private Expenditure: business expenditure