Expenses and costs incurred by small businesses and companies before they commence business can be offset against their sales in the first accounting year if they can proof that the pre-trading expense is incurred within seven years from their first day of business and it would have been deductible as a business expense if it has been incurred after the business starts trading.
Examples of expenses and costs can be incurred prior to commencement of business include advertising costs, wages, rent, rates, insurance, bank charges and interests, lease rentals on plant and machinery, computers equipment, office furniture and accountancy fees.
For business asset bought before commencement of trade it is introduced to the business at the current market value and is treated as it was purchased on the first day of business. The business is also entitled to claim capital allowance on the tangible asset.
Concise Accountancy offers fixed fee accounts services to Ltd companies and the fixed fee packages include taking care of your company accounts and corporation tax return and also include taking care of your pre-trading expenses and capital allowances for you. feel free to contact us.
Concise Accountancy – Managing your small business tax can save you money
