Can I Claim Netflix and Spotify as a Business Expense?

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Can I Claim Netflix and Spotify as a UK Business Taxable Expense?


As a small business owner, we are always looking for ways to save on taxes. One potential way to do this is by claiming business expenses. But what exactly can be classified as a business expense? Read on to find out if Netflix and Spotify falls into this category.

 

What Are Business Expenses?

In order for an expenditure to be considered a business expense in the UK, it must meet certain criteria. 


According to the HMRC, a business expense must be:
- Wholly and exclusively for the purpose of the trade, profession, or vocation
- Incurred when you are carrying on your trade, profession, or vocation
- Include expenses that would be allowable even if you were not carrying on a trade, profession, or vocation.

Based on these criteria, we can deduce that in order for Netflix or Spotify to be considered a business expense, it must be used solely for work purposes. This means that if you are using Spotify to listen to music for enjoyment outside of work hours, you cannot claim it as a business expense.  You cannot have any private element.

It's also important to note that even if an expenditure meets the above criteria, there are still some exceptions that may prohibit you from claiming it as a business expense. 


These include:
- Expenses for which you have already received tax relief
- Expenses incurred before you started trading
- Private expenses not related to your trade
- Capital expenses
- Expenses incurred by other members of your family or household
- Entertainment expenses.

Keeping all of these exceptions in mind, let's take a look at whether Spotify can be classified as a business expense in the UK.


Listen Up: Can I Claim Spotify as a Business Taxable Expense in the UK? 


Here's What You Need to Know. Here's what we know so far: in order for Spotify to be considered a business expense in the UK, it must meet all three of the following criteria:
1) The expenditure must be wholly and exclusively for the purpose of the trade 


2) The expense must be incurred when carrying out the trade 


3) The expenditure would still be allowable even if you were not carrying out the trade. 


Additionally, there are several exceptions that could potentially prohibit Spotify from being classified as a business expense. 


Based on this information, we can conclude that Spotify or Netflix are only eligible to be claimed as a business expense in very specific circumstances—namely, if it is used entirely for work purposes and can pass all three of the HMRC's requirements without falling into any of the exceptions. 


If you're unsure whether your particular circumstance qualifies, we recommend consulting with an accountant or tax specialist before claiming Spotify (or any other potential business expenses) on your taxes. 


Given how complex taxes can be, it's always better to err on the side of caution! 


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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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