Setting up a new business is not only time consuming but can also be expensive so it is important to know what pre-trading expenses you can claim.
Whether you are a sole trader, partnership or limited company you are likely to have incurred costs setting up your business before you make your first sale. These initial pre-trading expenses can be substantial but may be able to be claimed back against your tax when you complete your first year end accounts.
Typical examples of pre-trading expenses a business may incur include:
In order to reclaim these they must have been incurred "wholly and exclusively" for the business rather than for personal use. Expenses incurred up to seven years before trading can be reclaimed as long as they would have been tax deductible if they had been incurred during trading. The expenses are treated as having been incurred on the first day of trading and deducted from your first years accounts.
For many businesses starting out every penny counts, it is therefore important for you to keep accurate records of all pre-trading expenses including copies of invoices and receipts.
Contact Ashored for help setting up your business and support in reclaiming your pre-trading expenses.