Pre-trading expenditure relief (UK)
Eligible expenses incurred for a trade no more than seven years before it starts may be treated as incurred on the first day of trading if they are not otherwise deductible and would have been deductible had they been incurred when trading began. The nature and purpose of each expense and the applicable statutory conditions must be checked.
Worked example
A sole trader starts trading on 1 January 2026. In October 2025 they incurred £1,200 of qualifying trade expenses that would have been deductible at commencement and are not otherwise deducted. Assuming all conditions are met, the expenditure is treated as incurred on 1 January 2026.
Common mistake
Deducting all expenditure incurred before trading without checking the seven-year limit and whether the expense would otherwise qualify.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |