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Credit Card Annuity

Can I claim?

Yes.

Conditions

The use of a credit card can be included for tax relief purposes providing the use is appropriate and business-related. Whether the account is being used as a means of credit or simply the best way to segregate costs.

However, if you use your personal credit card for business costs, you will only be able to claim a proportion of the overall amount, and will have to exclude the part which was used for personal expenditure. 

On SimpleTax

You will find the "Credit card charges" category under the "Financial and Insurance" expenses group for your Self-Employed page.

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More information

Credit cards are a common feature of businesses, and using them can be an easy way to organise finances.

It's not a legal requirement to have a separate credit card for business and personal use but many companies opt to do so, even if they are just sole traders. By keeping the two different types of expenditure apart, it makes it far easier to show exactly what are business costs and what can be offset against the tax liability.

If you don't keep separate accounts and cards for business and personal use, you will need to be able to calculate exactly what the charges relate to so the right amount of tax relief can be claimed. This comes under the 'Dual Purpose' rules as defined by HMRC; any cost which has both a private and commercial must be able to be accurately split or else it will be disallowed completely.

The same principles apply for business banking, as well as any leasing payments or hire purchase interest.

Although it may sound like a bad idea to purchase items on credit, it can help your business to save money and improve cash flow. Getting tax relief on interest charged, as well as being able to save capital and earn interest means you could benefit financially from using credit if you take advantage of all the tax efficiencies available. 

 

 

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