Non-business expenses

Produced by Tolley
Non-business expenses

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...


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 the expense 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, the expenditure must be incurred ‘wholly, exclusively and necessarily in the performance of the duties of the employment’. This is discussed in the Business expenses ― general rule guidance note. If an expense is not incurred for these reasons then it is disallowed.

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

HMRC guidance is at EIM31660 onwards.

The case law in the area 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 the case that you would have to look for a case which has similar facts in order to understand the taxable 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 the employer will have a policy restricting the private use or certain types of use of the laptop. Private use of the laptop is, however, unlikely to be precluded by the employer. Indeed it

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