Non-business expenses

Produced by Tolley

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non-business expenses
  • Introduction
  • Dual purposes
  • Fully non-taxable
  • Partly non-taxable
  • Non-business expenses
  • Education and training-related expenses
  • Domestic costs
  • Legal and accountancy costs
  • Agent’s fees or costs of finding employment
  • More...

Non-business expenses


In order for an expense to be tax deductible it must be incurred because of an employee’s employment. Any non-business related expense is, therefore, not relievable except in some very particular circumstances.

This guidance note deals with three separate issues. The first is where an expense has both a business and private element. In this case some, or indeed all, of theexpense may be allowable. The second case is where an expense must be treated as a non-business expense and is not deductible for tax purposes. The third is expenditure which appears on principles to be non-business yet qualifies as non-taxable, usually due to statutory provision or HMRC concession.

Dual purposes

In order to claim a deduction for tax purposes, theexpenditure must be incurred ‘wholly, exclusively and necessarily in theperformance of theduties of theemployment’. This is discussed in theBusiness expenses ― general rule guidance note. If an expense is not incurred for these reasons then it is disallowed.

However, despite thestrictness of this test, it is understood that there are instances where obviously business-related expenditure has some private usage. In these instances, thefull amount or an element of it may be deductible.

HMRC guidance is at EIM31660 onwards.

The case law in thearea of duality of purpose is often contradictory and appears to lack a clear line of precedence which would provide a simple answer with regard to possible problem areas. In practice, it is often thecase that you would have to look for a case which has similar facts in order to understand thetaxable status of a particular item of expenditure.

For example, an employee may be provided with a laptop computer in order to carry out his duties of employment. It is likely that theemployer will have a policy restricting theprivate use or certain types of use of thelaptop. Private use of thelaptop is, however, unlikely to be precluded by theemployer. Indeed

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