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Last Updated: Thursday, 5 April 2007, 13:12 GMT 14:12 UK
Can costs be written off?
Champagne expenses can't be claimed back from the taxman
Champagne expenses can't be claimed back from the taxman
If you're self-employed, it is possible to write off a number of costs for tax or, in technical jargon, claim tax relief on expenses incurred during the course of running your business.

You deduct these expenses from your income and tax is levied only on what's left.

There are strict rules about what does and does not count as a legitimate tax-deductible expense.

It is essential to keep good records and ensure that all receipts and invoices are kept for all expenses.

It is a legal requirement to hang on to these, so don't throw them away once your tax return has been submitted to Revenue & Customs.

Some expenses incurred in the course of business cannot be claimed back - these include entertainment and corporate hospitality, home to work travel and personal medical expenses.

Of course, it is important to keep a record of expenditure on all these items for accounting purposes, but they cannot be used to obtain tax relief.

There are many overhead expenses that can be claimed against tax, including a proportion of your rent if you work from home.

Housing costs

Mortgage costs are not really covered - it is possible to claim a small amount as the "cost of using your house as an office" but if you try to claim mortgage payments as a tax deductible expense, it is possible that this could give rise to a Capital Gains Tax charge when you sell your house.

Normally, of course, the sale of your main residential property is free of CGT - but if the Revenue can show you have been paying the mortgage and treating it as a business expense, the tax position on your house sale will change.

What can I claim?
Work travel
Accommodation and food on business trips
Car mileage
Accountancy costs
Computers and work equipment

Travel from home to work is not allowed but travel from work to, say, clients' premises, is covered. If you use a season ticket to cover all this travel, it is possible to apportion an element of the total cost of the ticket as a business expense and claim accordingly.

The use of a car is an expense that can be used to claim a reduction in tax, but only the business proportion based on the percentage of your total annual mileage that is exclusively for business use - the Revenue is well accustomed to outlandish motoring claims and this means that it knows what is considered reasonable mileage and what is not.

Food and drink

Subsistence, that is the cost of meals and drinks while away from home, can be counted but only in moderate amounts as otherwise it starts to look like entertainment, which is not allowable.

A range of other business expenses are allowable, including publicity costs such as advertising, the cost of complying with health and safety regulations (for instance the cost of protective clothing), accountancy costs and all bookkeeping and financial services relating to the maintenance of proper accounts.

Bad debts are also allowable as the absence of the income effectively cancels the sale from the tax point of view.

If you have doubts about what is tax deductible, or have a query about your records, you should always seek help with a professional tax adviser or contact the Revenue.

Further information:

For information about what records you should keep, see the Revenue's leaflet, known as SABK4.

You can find out how to contact the Revenue through the "contact us" section on the Revenue's website.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.


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