Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Wed, 13 Mar 2024 14:31:19 GMT by TR
Hi, I have been making some purchases of equipment in the last few months in preparation to start a business from home as a sole trader. I wanted to know if there was a difference in how pre-trading expenses are treated depending on if they are accrued in the same tax year vs a previous tax year to that in which I register as a sole trader? This difference will help me know if I have to rush to organise appropriate insurance and mortgage approvals to get set up before the end of this tax year or if I can take my time and wait until next tax year as would be preferable for unrelated reasons. Further to this, if I have £1000 of pre trading expenses and make £1000 in my first year trading, is my taxable an NI applicable income £0 for that year, or have I misunderstood? Thank you T
Posted Wed, 20 Mar 2024 10:06:13 GMT by HMRC Admin 25
Hi TR,
Pre trading expenses are claimed in the year that trading commences.
Please have a look at:
BIM46351 - Specific deductions: pre-trading expenditure: scope).
For capital allowances, there are special provisions to treat pre-trading capital expenditure as incurred on the date trading starts.
Please have a look at:
CA23020 - Plant and Machinery Allowances (PMA): qualifying expenditure: expenditure incurred before qualifying activity begins).
Thank you. 


You must be signed in to post in this forum.