Allowable expenses include ………….

Here’s a list of expenses that will be allowable for tax. So you can subtract them from your income and only pay tax on what’s left. We’ll look at some special cases in a later article.

• Anything you buy and sell on to your clients. For example if you sell worn knickers to your clients then the cost of buying them is allowable. Obviously you also need to include the money you receive from your client as part of your income.
• Payments to your driver. You ought to make sure he recognises he is self employed and needs to tell HMRC about his income from you. A receipt from him would be nice, but if he doesn’t want to declare it you can hardly claim tax relief. And if your driver is your partner there’s no point in paying him if he’s already a tax payer – you’ll get the tax relief but he’ll have to pay about the same amount in extra tax.
• Rent for any flat or accommodation you pay for and use just for business.
• And if you use a flat just for business you can claim for any council tax, water rates and heating and lighting bills that you have to pay.
• If you work from home you can claim a proportion of your council tax, water rates and utility bills.
• Advertising
• Agency fees
• Photography for advertising
• Web-site maintenance
• Telephone – the business proportion
• Internet charges
• Bank charges if they’re for a bank account you only use for business
• Travel expenses for business journeys – e.g. train fares, taxis, car parking. Of course you must have paid for them. You can’t claim for an airline ticket if the client paid for it.
• Subsistence. If you are working away from home and have to stay overnight then you can claim for the reasonable cost of hotels and subsistence including lunches. You do of course have to actually pay for the cost before you can claim tax relief – you can’t claim for an evening meal if your client paid for it. If you are not staying away from home overnight you can still claim for modest lunch expenses if you habitually travel on business or make occasional business trips.
• Protective clothing – unless you get them free from the GUM clinic!
• Uniforms. Clothing is a bit of a minefield because the Revenue take the view that most clothing isn’t bought ‘wholly and exclusively’ for the business but also for the personal benefits of warmth and modesty. Protective clothing is fine, so you can claim for the steel toe-capped boots and the boiler suit. But there’s a problem with everyday clothes even if they’re clothes you wouldn’t otherwise choose to wear – there is a legal case (Mallalieu v Drummond) where the House of Lords threw out a claim by a female barrister who said she only bought black clothing for work because, being blonde, black didn’t suit her. So my advice would be to claim for uniforms (the pvc nun’s habit and the traffic warden’s rubber tunic) but not dresses and lingerie that you might wear outside work. And if you are a barrister, as well as an escort, you can claim for a barrister’s wig and gown.
• Similarly the cost of entertaining is not normally allowable. However if part of the package you are selling to your clients includes entertaining him then the cost would be allowable. So if you advertise that as part of your service you will cook him a three course lunch while dressed only in stockings, suspenders and high heels then the cost of providing his lunch would be an allowable expense. But if as part of an evening date you buy a round of drinks that would not be allowable.
• Make-up etc is likely to get caught by the wholly and exclusively rule. The best plan is probably to have a separate bag of work make-up.
• And last, but by no means least: accountancy fees are allowable.