Tax Treatment of Business Expenses (M-R)

Key requirements

Employee medical deductions are normally capped at 1% of total employee remuneration, increasing to 2% under qualifying arrangements. The remuneration base excludes items such as directors’ fees and benefits in kind. Expenses of private cars are generally disallowed even when used for business or reimbursed to employees, while commercial vehicles have different treatment. Section 14N provides a separate route for qualifying renovation and refurbishment costs that are not plant or machinery; investment holding companies do not qualify as trading businesses for that route. The source contains detailed caps, elections and effective dates. Classify the actual expenditure and applicable period before choosing the deduction, and retain itemised invoices rather than applying one rate to all staff or premises costs.