Accountancy fees

Conditions

• Fees for work on the business are allowable — preparing the business accounts, bookkeeping, payroll, and the accountancy work behind the self-employed pages of a tax return. HMRC's longstanding practice allows the normal recurring cost of preparing accounts and agreeing the tax liability on trading profits.
• The purely personal side of a Self Assessment return — calculating personal tax, or dealing with personal investment income, capital gains and similar — is not a business cost. Where one bill covers both, only the business portion is allowable, so ask for an itemised invoice.
• For a limited company, fees for the company's accounts and Corporation Tax return are allowable, but fees for a director's personal tax return are a personal cost — if the company pays them, it is a benefit in kind.
• Fees for an HMRC enquiry are allowable only where it results in no adjustment, or an adjustment that does not arise from careless or deliberate error; fees tied to your own carelessness or wrongdoing are not allowable.

Common mistakes

• Claiming the cost of personal tax advice unrelated to the business.
• Including fees for capital or one-off transactions that may need separate treatment.

What to keep

• Invoices from your accountant or bookkeeper.

Real-world example

A limited company pays its accountant to prepare the annual accounts and corporation tax return. These fees are a normal cost of running the company and are allowable.

Frequently asked

Related allowances