Disallowable typically happens because QuickBooks Self-Employed defaults to the Simplified Expenses (Mileage) method. Under HMRC rules, the 45p per mile rate is an all-inclusive amount intended to cover costs such as fuel, insurance, servicing, and general wear and tear. Since this mileage rate already accounts for such expenses, QBSE automatically marks individual receipts for fuel or repairs as disallowable, preventing you from accidentally claiming the same expense twice.

If you're not tracking mileage, you can reclassify those transactions as Travel Expenses rather than Car and Van. Just ensure that you only claim the business portion of the expense when doing so.

For more information, you can refer to this article: Understanding allowable and disallowable expenses.

If you have other questions, don't hesitate to add a reply.

JafordfencingAuthor

Can you also explain why the same has happened to as/entertainment and rent/utilities/insurance please?

Can I ask fro a prompt reply as I am on a deadline by HMRC and need to submit a revision for 03/04 tax year

Bryan_M

QuickBooks Team

Thank you for your prompt reply, @Jafordfencing.

Expenses such as entertainment, rent, utilities, and insurance may be classified as disallowable if they are not intended for business purposes or are considered personal living costs. Certain categories, like client entertainment, fall under expenses that HMRC does not permit. For a detailed list, please refer to the official HMRC guidance.

Additionally, you can review this article and navigate to the "Allowable Expense Categories for Self Assessment (SA103F)" section. It explains why some of your accounts, such as rent, rates, power, and insurance costs, might be marked as disallowable: Understanding Allowable and Disallowable Expenses.

If you have any further questions, feel free to reply below, and we’ll assist you promptly.

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