Tx notes fa22 Final

(f)
Legal and professional charges 
‣
allowable if connected with the trade and are not related to capital items.
‣
specifically 
allowed
by statute:
•
costs of obtaining loan finance 
•
costs of renewing a short lease (50 years or less)
(g)
Interest payable 
‣
interest paid on borrowings for 
trading purposes
is allowable on an accruals basis 
therefore no adjustment is needed.
(h)
Lease rentals on cars
with CO2 emissions exceeding 50g/km
‣
the disallowed amount is 15% of the leasing charges p.a.

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(i)
Premium paid for the grant of a lease
(see chapter 3).
‣
the premium itself is disallowed as is any amortisation of the premium
‣
the allowable amount to be computed is:
where n is the number of years of the lease.
(j)
Fines and penalties
- Disallowed unless a parking fine paid on behalf of an employee and 
incurred whilst on business.
(k)
The accounting profit must be adjusted for the
 private expenditure of the business owner.
If 
the owner uses a car in the business and 20% of his mileage, then only 80% of motor 
expenses are allowable - thus add back 20% in the adjustment of profit.
However if the owner provides an employee with a car, and 20% of the mileage is for private 
use by the employee, then the full amount of motor expenses is allowable. (The employee is 
then taxed on the private use as employment income - see chapter 9).
(l)
Any deduction described as the owner’s salary, or drawings or interest on capital invested in 
the business is disallowed.
(m)
Interest paid on overdue tax is not deductible and interest received on overpaid tax is not 
taxable.
(n)
Any salary paid to the family of the owner of the business must not be above the normal 
commercial rate for the job.
Only salary at the commercial rate for the work done is allowable.
(o)
If an owner removes