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- This topic has 1 reply, 2 voices, and was last updated 4 weeks ago by JillyB.
- February 19, 2023 at 3:32 pm #679143Eunice03Participant
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On19 April 2021 Simon purchased a derelict freehold house for £127,000.Legal fees of £1,800 were paid in respect of the purchase. Simon then renovated the house at a cost of £50,000,with the renovation being completed on 6 August2021.He immediately put the house up for sale, and it was sold on 27August 2021 for £260,000.Legal fees of £2,600 were paid in respect of the sale. Simon financed the transaction by a bank loan of £150,000that was taken out on 19 April 2021at an annual interest rate of 6%.Thebank loan was repaid on 28 August 2021.
Simon– Income tax and NICs for 2021/22 if trading
costs incurred 127000
legal fees on acquisition 1800
legal fees on sale 2600
Trading income/net income 75600
Personal allowance (12570)
Taxable income 63030
Good day,Please i don’t understand why the legal fees on acquisition and legal fees was an allowable expense when calculating the trading income.I’ll appreciate if you can explain betterFebruary 20, 2023 at 10:07 am #679208JillyBModerator
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Legal fees are an allowable expense as the property is a trading asset not a capital asset
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