Is an Accountant's Fee Tax Deductible?

How it works

HMRC allows costs incurred wholly and exclusively for your business. Bookkeeping, accounts preparation and filing the business pages of your return meet that test.

If your accountant also deals with personal items — such as property you own privately — that part may need splitting out.

Extra fees arising from an HMRC enquiry are often allowable if the enquiry finds nothing wrong, but may not be if it uncovers undeclared profits. We explain this before any work starts.

Sole traders and companies

For a sole trader, the fee goes in your business expenses on your Self Assessment return and reduces the profit that Income Tax and National Insurance are charged on.

For a limited company, the company pays the fee and claims it as a business cost, reducing Corporation Tax. Personal tax work for the director, such as their own return, may be best invoiced separately so it is clear what the company is paying for.

Bookkeeping software subscriptions and payroll services usually work the same way — they are business running costs.

According to Waqas Sagar, Chartered Accountant at influencers.accountants, if you use the £1,000 trading allowance, you cannot also claim actual expenses like accountancy fees — so compare both.