 back to the channel and welcome back to another episode with my friend Andrew Casal all the way in London. How are we doing Andrew? I'm very well, how are you doing Leo? Very good, very good. Happy New Year. How was your Christmas and New Year celebrations? Yeah, happy New Year to you too. It was all good. Busy period for us accountants but we're getting through it. Nice. Have you set your New Year's resolutions? Yeah, be better at everything. Nice, I like it. Have you stuck to it yet or you've broken it already? No, no. I think I've stuck to it for sure. So, you know, going gym, being healthy, that kind of stuff, which is obviously great for, you know, in the sports, in the sports industry. How about you? Me, I just treat it as an ongoing thing. No New Year's resolutions, just keep consistent. That's it, I love it. Right, so Andrew, welcome back to another episode again. Today, we're going to be talking about tax allowable deductions, right? One of your favourite topics. Yeah, it's an exciting one for sure. So, yeah, so essentially what we're going to be talking about today is obviously it's going to be specific for sports coaches. We're going to run through what is an actual tax allowable deduction, just the basics of it. And then we're going to discuss common expenses that are on the pitch and then common expenses that are off the pitch. And yeah, it's going to be a bit of a general overview. A lot of this can be going to go into so much depth in every single sector of it. But we're going to have a bit of an overview. Another thing as well, Leo, I want to mention is a bit of a disclaimer. This is just the general information. It's just to give sports coaches a better idea of what their common tax allowable deductions are for their sports coaching business. Nice. I'm excited to learn from you today, Andrew. All right, all right, all right. Well, to be honest, you should know a few of these things, actually. I should do, I should do. But it's always good to recap, you see. Of course, of course. All right, brilliant. All right, let's get into it. So, what is a tax allowable deduction? So we're going to start from the top. So generally speaking, all businesses have to report their income and expenditure to the tax authorities, namely HMRC in the UK. Now, you have to be aware that not all income is taxable. Most of it is, unfortunately. So, you know, there are going to be some exceptions. So for example, there's going to be certain grants given by certain organizations or benefits, especially for new businesses which may not be taxable. And there's going to be, this is what we're going to be talking about today is expenses for the business. Most common deductions that a business owner may think of are actually tax allowable. There's going to be some rules which go against the common sense. And it's just tax law. But essentially, you have your income, you deduct your expenses and you get your taxable profit. And that's essentially what any tax you're going to be paying on there if you're a limited company or you're self employed is going to be based off your taxable profit. So we're going to go into expenses. So, you know, not all, not all expenses are allowable for tax. So one example would be client entertaining. That's strictly not allowable for deducting your taxable profit. So for example, taking clients out to dinner, that's just something that, you know, you can do and you can put it through your business accounts. But when coming to calculating your taxable profit, it will be added back because it won't be a allowable expense and allowable deduction, so to speak. So that's pretty much it for allowable deduction. Anything on your side, Leo? Yeah. So a common one I know a lot coaches do with the clients they work with is they have like an end of year party. So can you allow some of that? Can you deduct all of that? What's the thing, what's the rules with that? Yeah, that's a good question. So if it's a staff event and it's a staff party, then yes, you are allowed that. If it's just your clients only, that will be seen as client entertaining, unfortunately. But having said that, it is case by case basis. So any sports coaches that want to understand the rules around that definitely speak to your tax accounting professional on the specifics of that. But generally speaking, it's not allowable because it's seen as client entertaining. Okay. Perfect. Okay. So now we're going to go on to expenses, usual expenses on the pitch. So the first one is sports equipment. So you've got your sports balls, your practice nets, your goals, your protective gear, your helmets, shin pads, things like specialist clothing, football boots, studded boots. Now this is one of the things where I come across with sports coaches is and any business owners in the sports industry in general is put in through normal clothing, even if it's workout clothing. If you're an instructor, that is not so much a gray area, but how the tax authorities see it is if it's a piece of clothing that you would wear on a casual basis, then you can't, that is not a allowable expense for tax purposes. We will go on to talk about branded clothing. Now that's different. So for example, if you've got branded t-shirts, shorts, tracksuits in the company, the business name, then yes, that is an allowable tax deduction. But if it's just a normal t-shirt and you want to expense that, unfortunately, even if you are using it only for your business, it's very hard to justify that with the tax authorities to say that is an allowable deduction. So that's one thing to definitely. So essentially every piece of clothing that you want to deduct has to have your logo on it, right, your brand. Correct. Now of course, as I said, with other, if there's special pieces of clothing, if it's helmet shin pads, of course, studded boots, it's very special, so you don't have to really have branded that have to be branded because it is especially if it is protective clothing, you no need for, you know, your business branding to be on it, but it's more for the usual clothing that you would have. Okay, now coaching gear. So whistles, stopwatches, things like that. Of course, those are allowable deductions. Hiring coaches, other coaches or staff, you know, if you're subcontracting them on the pitch for a set amount of time, set amount or if you've got them on the payroll, if you're a limited company, you could even put yourself on the payroll. If you're self-employed, you can't. I think we did touch on that in the previous, the previous one, the previous podcast. But yeah, essentially if you're hiring someone to do the job that you're doing or an assistant coach, then of course, that is an allowable deduction. Other things as well is sports facility costs. So, you know, things like if you're renting the sports grounds, of course, that is going to be an allowable deduction for your tax. Okay. So going back to coaching gear, sorry, Andrew, like when you talk about stopwatch, right, now a lot of coaches watching this, right, they might be thinking, right, so I can just go and buy a Rolex watch with a stopwatch on it and deduct that. Is that the case or does it have to be a specific watch? Yeah. So look, it's, you know, this is, these are good questions because we start talking about does it make commercial sense to buy a, you know, £5,000 watch, which you're just using it, you know, and as you said, it's got other gadgets which not really going to be used for your business. Hard to justify that, really hard to justify that. Don't get me wrong, of course, you can get a very good stopwatch and it can be quite pricey, but, you know, it's, you've got to go to the, you've got to ask yourself, does it make commercial sense and to really make that decision really? Yeah. And also, you've got to put yourself always in the position of someone doing the taxes in the sense that, you know, if you're going to put through a £1,000 watch, what's the reaction they're going to have? They're going to be thinking, yeah, this is, what's the, why would someone spend £5,000 of their business money on a watch? Exactly. And what I would say actually, and, you know, there's so many different scenarios where it could be allowable. So what I would say is speak to your tax professional because if you're considering, especially if you're considering to buying a piece of equipment which is relatively high in value, it's always good to speak to your accountant and ask them, look, I'm looking to buy this, is it allowable for tax reasons? And they can confirm it, it, you know, puts you at ease, peace of mind that, you know what, that's actually for the business and you can expense it, especially for sports. There are, you know, as we mentioned about the clothing, that can be a common one. So it's really a good idea to speak to a tax professional on these, these nuanced scenarios. Yeah, I love that. Okay, now off the pitch. So here we've got things like subscription costs. So if you've got, if you're subscribed to a sports magazine, newsletter, a dedicated streaming channel. So if you're, for example, a netball coach, and you want to look at strategy, and there is a, you know, a streaming channel which is dedicated to netball, then of course that is an allowable expense. CPD, which is continued professional development. If you're a sports coach, and you are with a professional body, for example, they may require you to have a certain CPD across, you know, the year. Any payments towards that course is an allowable expense. If you're doing refresher courses, or you're updating skills, or even if you're going into a sales seminar to increase your sales, that as well is an allowable expense. And whether it's online or if it's live, is also allowable as well. Another thing as well is business insurance, liability, property, business devices, you know, those things as well are allowable for, for tax as a deduction. If you're, if you're a coach watching and you want this graphic, get in contact with us, and we can, we can send that through to you. Because I know a lot of coaches watching, they'll definitely want this because it's really good information. Yeah, yeah, for sure. And it'll definitely, and right now I'm focusing on one thing, but the mind map will show everything in its entirety. So definitely be useful for sports coaches, especially starting out. Okay, next thing, advertising and marketing costs, you know, pretty self-explanatory, but any sort of social media ads, and these sort of campaigns, posters, banners, flyers, of course allowable deduction for your business. Okay, travel, this one's a bit of a juicy one. So I want to talk a bit more summarized here because it can be, as I mentioned, there can be a session specifically on travel. And I'm going to reiterate as well, it is specific case by case basis, but as Gen, your personal car, then you, that is allowable, but you have to claim the mileage on that. You claim the mileage on that, if it's your personal car for business journey. So you have to make sure that you're recording, you have a mileage log, and then give that to your accountant at the end of the year. If you have a company car, specifically for the business and it's addressed, the company car is bought under the company, then yeah, then there are more costs allowable. However, there are other factors to consider, for example, CO2 emissions of that car. And whether that car is going to be stationed at your place of work or at your home, there is other things involved in that it can be quite communicated. As I said, there could be a separate podcast on travel in its entirety. So yeah, any questions on that, Leo? No, it's a good one. I think this is something a lot of coaches don't realize with travel. And again, have it like purchasing like a van, to take your equipment. I think it's a really good investment. And that's again, another tax allowable deduction that coaches should take advantage of. Because not only can you deduct it, but it's also going to help you to grow and scale your business to get to different places, etc. So I think it's really good information. And like I said, I think a lot of coaches definitely need to need to make notes on some of these things, because it's really good. Yeah. And I think it's a really important point you've mentioned there, a van, because from a tax point of view, a van is considered plant and machinery, which in a simple sense, you get a lot more tax relief on the van. Whereas a company car, you don't. It's based on your CO2 emissions, and this can be a reduced percentage which you can deduct. Generally speaking, vans are a lot more tax efficient. And especially with sports coaches, it's going to be something if you have a lot of equipment, it's a much better investment for you. And as I've mentioned before, don't make any purchases just for the tax reasons, but it's good to know. It's definitely a factor to take into account. No, always speak to your accountant before making them as well. Definitely. Food whilst out on business. This is another juicy one. So there are a couple of things there, and this is probably even more nuanced than travel, but you want to think about how far is where are you going? Are you going to a sports facility? Are you renting sports grounds which is near your business base? If it is, then generally speaking, it's not allowable because what HMRC would say is you could just go back home and eat. So distance is one factor. Another factor is a normal commute. Are you going to the same place over and over again? Another factor as well is is it temporary? Are you contracted with that sports facility to maybe just be there for six months? If it is temporary, then it's more likely it's going to be allowable. But if there's any inkling that it's a normal commute, then you can't deduct any sort of, if you're getting a sandwich on the way there, you can't deduct it. Of course, if you're going to a seminar, which is a few hours away, that's seen as allowable. So it comes to common sense, but also there are these little differences that can make all the difference. Okay, like that. Okay, write the bonus round before we finish up. Andrew's providing a bonus for us. Okay, as I said, these can be a separate podcast on each of these can be made, but generally speaking for new businesses, you know, ensure that bills are in the business name, in the company name. You know, if it's your mobile phone, ensure that that contract is in the company name for it to put allowable expense. Do it from the start and then you can forget about it. Pre-trading expenditure, we mentioned this before in a previous podcast, but if you're a new business, you can claim seven years prior to starting trading, starting your business, you can take into account all those expenses leading up to that seven years prior. So that is something that, especially for new clients that I have, take advantage of that because it allows you to, you know, give you a chance to grow your business because if you're a very profitable business to start off with, you're taking into account these expenses that you've made towards your business before starting out. So definitely a good planning point there. You know, loss relief. If you've made a loss, most businesses in their first second year do make a loss and it's good to take advantage of that. You can set that loss off against future profits. So it's important to note that. So, you know, if you're a business and you're making these expenses, you're making a loss and you're just thinking, look, there's no point taking these into account because I've made a loss already. Well, not really. You want to make sure you take into account all your expenditure because that will be set off against any future profits in the future years. Right. I like that. And lastly is capital allowance. Now, capital allowance in the tax world is, if you're buying a large piece of equipment, that is, you know, if it's over £100, £200 and it's to last you more than two years, it would be seen as a capital expenditure. Now, especially in your first few years of starting your business, you may want to defer your capital allowances, especially if you're self-employed because you can use your personal allowance to offset any tax payable. So it's definitely a good one and a lot of businesses are not aware of it. Deferring capital allowances is a good one. And if you think that you might be in scope of this, definitely speak to your accountant about it. I love that. And it gave me a great idea of something we'll do in a later episode is a lot of the coaches that I work with, they're looking to invest into indoor facilities. So I don't know if that does that fall under capital allowance or what is that? It's more buildings, that's more of the buildings allowance, but we can definitely talk about that in a future podcast for sure. Perfect, perfect, love that. Perfect, all right, Andrew. Well, again, great information. I think the biggest message here is when you make a purchase, always speak to your accountant and they'll be able to guide you on what you can deduct, what's allowable. But Andrew, again, thank you for coming on, sharing your knowledge. Very valuable. And I know I definitely, I always learn something new from you. So thanks again. And I'm looking forward to our next chat. Brilliant, same, thank you. Take care.