For a self-employed sole trader, I understand that Pension Contributions are not allowable expenses. As a result should be set against the "retained earnings" (equity) or "business owes me" (liability) accounts. Is the same true for Class 2 National Insurance Contributions?
Entertaining is the infamous non-allowable expense. Ie providing food for clients. When I run training events I provide a buffet lunch for the attendees. Is that still seen as 'entertaining' or are lunches like that seen as an allowable expense?
The follow on is do all non-allowable expenses have to be set against "retained earnings" and/or "business owes me" or is there some other way of dealing with them?
Sorry for the many questions I'm asking at the moment. But I want to ensure I get this all set up correctly.
Hi Ian,
If you pay your pension contributions and class 2 national insurance from a business account, you should record this as a non-business payment (allocated to 'Owners Drawings and Personal Use'). See this page for details:
http://www.solaraccounts.co.uk/help/how-to-record-non-business-payments.php
Unfortunately I cannot say what expenses are allowable for tax purposes - you will need to ask your accountant or local tax office.
Cheers,
