Disallowable Expenses on Profit and Loss Report

Hi,

Great question — it's always good to double-check before submitting!

Disallowable expenses are costs that your business has incurred and recorded in its accounts, but which HMRC does not permit as deductions against your taxable profits. Common examples include:

• Entertainment & hospitality — Client entertaining, corporate hospitality (note: staff events like Christmas parties may be allowable under certain conditions)

• Depreciation & amortisation — Accounting depreciation is disallowable; instead, tax relief is claimed separately via capital allowances

• Fines & penalties — Parking tickets, HMRC late-payment penalties, regulatory fines, etc.

• Political donations

• Non-business expenses — Any personal costs put through the company

• Certain legal fees — e.g. costs relating to acquiring capital assets or settling fines

• Non-qualifying gifts — Gifts to clients are generally disallowable unless they are small branded items (under £50/person) that are not food, drink, tobacco or vouchers

• General provisions — e.g. a blanket provision for potential bad debts (specific, identifiable bad debts may be allowable)

• Capital expenditure — Costs for purchasing or improving fixed assets (these are relieved through capital allowances instead)

On WeFile, you can enter your total disallowable expenses in the Profit & Loss step, and the CT600 tax computation will automatically add them back to calculate your taxable profit.

If you're unsure whether a specific expense qualifies, we'd always recommend consulting with a qualified accountant to be safe, as the correct treatment can depend on the specific circumstances.

Hope that helps — let us know if you have any other questions!