Have you claimed your pre-trade expenses?

At Haines Watts, we know that a new business venture can take a lot of time to get off the ground and can generally be very expensive. Therefore, it is vital that you are aware of what pre-trade expenses you are entitled to claim back.

So, what is a pre-trade expense?

Pre-trade expenses are items and services you purchase before your business starts to trade. These are usually the expenses involved with the initial set up of your business or items you owned personally, which you are now using in your business.

Examples of pre-trade expenses:

• Equipment
• Rent
• Stock
• Professional costs such as accountancy and legal fees
• Insurance
• Stationery

You can claim back pre-trade expenses up to seven years before the start of trading, if they are wholly and exclusively for the purposes of the trade, profession or vocation.

These expenses are to be treated as if they were incurred on the first day of trading and recorded in your first accounts period and tax return. Capital allowances can also be claimed for the capital purchases (assets).

VAT and pre-trade expenses

If you register your business for VAT, you are also able to backdate expenses wholly and exclusively related to the purpose of the trade on your first VAT return. There is, however, a time limit for doing so:

• 4 years for VAT on the goods you still have or that were used to make other goods you still have

• 6 months for VAT on services

There are many complications and conditions for reclaiming pre-trade expenses, therefore, if you would like any further advice, please call our office on 01427 844876 or via email at