Pre-trading expenses

Pre- trading expenses and costs incurred wholly and exclusively for your business before you start trading can be offset against your company’s sales or income in the first year of business. This would reduce your income tax bill or your corporation tax bill that why you claim your pre-trading expenses.

You must prove that your pre-trading expenses were incurred within seven years from your first day of business and it would have been deductible as a business expense if it has been incurred after your business starts trading. You must keep the receipts and invoices of your pre-trading expenses in order to claim your claim.

Examples of expenses and costs can be incurred prior to commencement of business include:

  • Advertising costs
  • Wages and salaries
  • Rent and rates
  • Insurance for your business
  • Bank charges and interests
  • Lease rentals on plant and machinery
  • Computers equipment
  • Office furniture
  • Accountant’s fees for filing your confirmation statement and dormant company accounts.

Equipment and long term assets bought before the commencement of your business, it would be introduced to your business at the current market value and would be treated as if it was purchased on the first day of business.

Last but not least, If you have any questions about your pre-trading expenses, feel free to contact our London accountants.

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