The guidance on Books and Technical Publications is based on the principle of testing if the expense is "reasonably incurred; wholly and exclusively incurred or spent" if in doubt please see our guidance on this test.
When considering Books and Technical Publications each expenses item should be considered separately.
Some points to apply before claiming books and technical publications should be:
- 1) Does any person benefit from the item personally?
- 2) Is the publication for self-interest as opposed a necessity for the business only?
- 3) Was claimed for out of the accounting period to which it accounts to?
If either of the above points applies, then the "reasonably incurred, wholly and exclusively incurred" test, will probably fail and the expense will not be tax deductible.
In general, books, newspapers and magazines are zero rated for VAT purposes.
To help you consider the tests in relation to your expenses please see the following examples.
Example
1) Geoff is an IT Consultant who writes software packages in Java Scrip.
Each week he purchases 'Computer Weekly' magazine and claims the expense through his Limited Company accounts.
- Geoff does not need the publication to perform his skills at work
- There is a self-interest for Geoff in general to the magazine
In conclusion:
Not deductible.
If the company pays for this expense it should be reported on a P11d leaving Geoff with a personal tax liability and the company with the Employers NI charge.
For a Director whose contract is outside IR35 it would be more tax effective not to claim this expense and to pay for it out of earnings from dividends.
For a Director whose contract is inside IR35, the benefit in kind charge is deducted against the IR35 deemed payment calculation and so personal tax is only paid once, but as there are no Employees National Insurance on the benefit in kind there is a potential tax saving here.
2) Geoff buys the latest guide on Java script writing and claims the expense in this Limited Company accounts.
- Geoff work is writing Java Script and he needs to keep abreast of any changes for his work so this passes the test described above.
In Conclusion:
Geoff may claim the whole expense as deductible against corporation tax and no benefits in kind will apply.
For a Director whose contract is outside IR35 it is tax effective to claim this expense.
For a Director whose contract is inside IR35, the expense needs to be classified either under the 5% admisnistration expense or under the Section 198 expenses which should be those required to perform the contract itself.
Under either classification there is a saving of Employees National Insurance for the Director.