Tax and NI

10. Pre-trading Expenses

By the time you actually start trading, you may have spent thousands of pounds on research and setting up the business.

Provided you have formally notified HM Revenue & Customs that you have started up a business, most of these costs are usually allowable as business expenses in the first year.

10.1 From the moment you decide to go into business, start keeping a record (with matching receipts, invoices and bank statements) of all your business expenditure.

• Set up a separate bank account to make this easier.

10.2 Some costs are not allowable.

• For example, training courses are only an allowable expense once you have officially commenced trading.

10.3 If you form a limited company, the formation costs incurred are not allowable.