Expenses wrongly categorised as disallowable

Thanks for checking out the Community spae, H Compton.

QBSE automatically determines whether or not an expense is allowable depending on the information you've entered on your tax profile. This way, you don't have to manually adjust or classify them.

Take note that there are types of expenses that aren't business allowable based on your business operation, entity, and local regulation. You'll also want to review the category of the uploaded transactions to ensure they'll be reported accurately.

For more tips in managing your expenses in QuickBooks Self-Employed, I encourage reading this article:

• Self-employed business expenses
• About SA103F Categories

You can always visit us here if you have other questions about tracking your expenses. I'm always here to help.

Hi KlentB, 

I know that some expenses aren't allowable. However, why, for example, are half of my Zoom subscription payments under 'allowable' and half of them under 'not allowable'? 

It is an allowable expense, it's from the same provider, under the same category. What part of the system chooses that half of the subscriptions aren't allowable? 

I've put the expense under 'Other business expenses' as there doesn't seem to be another category which is more suitable. 

Could you advise if this is correct?

This is a massive flaw in the software.  The automation isn't always going to get it right, so there should be a way of manually changing it so the Taxes data is actually reliable. 

Thanks in advance. 

Hi H Comptom, this sounds unusual - so that we can check this further, please reach our live chat support on this link - they'll have the tools to take some specific account info and can set up a screen share to view the error :)

I'm experiencing the same problem whereby certain transactions are being marked as disallowable when I'm 100% confident they are allowable. Is there a way to recategorise them?

It's good to see you here, @jenp22.

I'm here to share some information about categorizing allowable expenses in QuickBooks Self-Employed.

QBSE automatically assesses whether or not an expense is permissible. You won't have to manually update or label them.

The SA103F categories that were tagged as allowable are expenses that can be deducted from your taxable profit. However, disallowable expenses are transactions that can't be deducted from your business income. For more details, you can check out this helpful article: About SA103F Categories.

For more tips on managing your expenses in QuickBooks Self-Employed, I encourage reading this article:

• Self-employed business expenses.

Additionally, you can consult your accountant or advisor if you have questions. Check the HMRC website for the current flat rate deduction amounts and examples.

I'll be here if you have follow-up concerns about this or should you need anything else, @jenp22. Have a good day.

I haven’t found a way and my accountant has said it’s a known issue with Quickbooks. I’ve decided to change software which is a pain in the neck but will save a huge amount of time going forward. 

I have also run into this issue, did you find out whether the category 'other business expenses' just made everything disallowable? Clearly Quickbooks didn't answer your question.

Can anyone please recommend a software which doesn't run into this problem please? 

I'm using FreeAgent which comes free with a Mettle account. So far so good :)

This is not solved! Reading through the comments it seems that people are not listening to the real issue. The OP clearly understands that different categories give different allowances, and they have explained that they are seeing the same transactions in the SAME categories giving inconsistent results.

I'm also having this problem. 11 x Home Office costs have been disallowed. 1 is allowed.
Some Advertising / Website costs are allowed, others are disallowed.

It seems random. This is clearly a bug, or an issue with my set up, but I have filled in the limited info in the tax profile and my reports are still all incorrect.

This is not the solution, this post is not solved. Please read it again, there is something else going wrong here.

This is not the kind of experience we want you to have, @Skeeg. 

I can share some information about our categories in QuickBooks Self-Employed (QBSE). 

To check about when transactions are classified as Allowable or Disallowable expenses, refer to this article: Allowable and disallowable expenses explained. You can also learn more on the HMRC website.

To further check why the same categories are giving inconsistent results, I suggest reaching out to our Customer Support team. They can check your account in a secure environment, verify the error and help you resolve them. 

Here's how to reach them:

1. Log in to your QBSE account.
2. Click the Assistant button at the top.
3. Type Talk to human in the chat box.
4. You'll now be provided with support options that are available at that time.

Check this article for more information about the different types of support we offer and their availability: Contact QuickBooks Self-Employed Support. 

Then, refer to this article for more information about how your self-assessment report summarises all transactions that you have entered under each specific  SA103F Categories: Transactions page versus Self-Assessment Summary page. 

Stay in touch if you have any other concerns about our categories by leaving a comment below. I'm always glad to help in any way I can.​ Have a great rest of the day. 

on the tax page, when i see a section on disallowed expenses once pressing on the amount (eg £180 disallowable expense), I would expect the redirection to this specific amount of transactions, but instead the system shows all of the transactions of this category. Can you please fix this issue, as it is extremely confusing and impossible to find which expenses are being excluded, because as other people are mentioning, they are being excluded wrongly.

Hello Ruc, thanks for posting on the Community page, so having had a look into this more for you it is working as designed. To why it does show both allowable and disallowable transactions even if you click the specific amount on the disallowable amount is because the expense category: Other business expense has 3 "sub-categories/accounts" professional fees, VAT paid (allowable expenses) and Taxes (disallowable). The £180 disallowable amount is the taxes that is showing up for you on your account. 

Is there a way that I could see myself all those sub categories and make adjustments if needed? I still cant see which of these disallowed expenses are my taxes. Also I had to change the category to 'other expense' from 'entertainment and meals' because they were categorised wrongly and coming up as disallowable expense which was again incorrect to my type of business.

Hi Ruc, there is currently no way to split the view between the different sub-categories. We agree this would be a handy feature to have and recommend submitting an idea for this on our QuickBooks Idea Exchange forum. We'll be reviewing all ideas submitted here, and if it gets to over 50 votes, we will review it with our Product team. 

The transaction dated 30/05/2023 is posted against the Taxes category and is the figure showing in the disallowable category. For further information on allowable and disallowable expense in QuickBooks Online, please see here. 

Is there a way to fix this now?

I have £15k of incorrectly labelled disallowable expenses here on my profile.

Many thanks.

Hello there, @Faz333. I'm here to share some information on why those expenses are categorised as disallowable. I'll also lay down a solution to ensure your expenses are properly categorised so your tax summary report will also be accurate.

The QBSE program will categorise your transactions as allowable or disallowable based on what specific category you've chosen upon categorisation. This is because each category is associated with specific SA103F box numbers which decide if it will be allowable or disallowable expenses on your Self Assessment tax return.

Please take a look at this article for more information contains the SA103F box numbers, QuickBooks account detail types, and information about what expenses you can deduct and what you can't: Allowable and disallowable expenses explained.

Furthermore, you can reach out to our Customer Care Team to perform a screen-sharing session to assist you with locating the incorrectly categorised expense transactions that caused them to appear in your disallowable expenses.

In case you need additional assistance on what specific account to use for tracking these expenses, I recommend seeking help from your accountant to ensure that your books are accurate. They'll also be able to provide more expert ways of dealing with this situation.

To change the category, simply go to the Transactions page, and then find the expense. Click the category and recategorise it to the correct one.

In case you'd like to take care of your self-assessment taxes on your own in Self-Employed in the future, I'll add this guide: Self Assessment for Income Tax checklist for QuickBooks Self-Employed.

This thread's still open if you have more questions about your transaction categories. If there's anything else I could do for you about your reports or any other things in Self-Employed, feel free to add the details to your reply. Have a good one.

I am an accounting professional completing a Self Assessment on behalf of a client and this is clearly a very important issue that QB is completely getting wrong. I've looked at my client's records and every transaction is posted and categorised correctly, but when I drill down into the disallowable expenses every single one is allowable so QB has undercalculated the allowable expenses by £3.2k for this client and they would have paid an extra £640 in tax because of this. Even with our fees the client will have saved money on tax compared to just using what QB says. 

Note to QB - your responses on this are entirely inadequate

 Hello JamesK, thanks for sharing this, we have passed it onto the team. 

Wow thank you for adding to my query James, I was confused with QBs reply at the time but not being a professional you have to accept what you're given. This bugs me every year having to go online and move things about to manually ensure the disallowable expenses are moved into whichever random category calculates as allowable. I refuse to let an APP error make me pay more tax! I often wonder how many thousands is payed unnecessarily by other people. 

Hi JamesK

I did manage to get this resolved but only after spending hours on the phone to quickbooks support. It's a year ago now so I can't exactly remember how it resolved but if I recall correctly, it had something to do the rules I had in place. I had to go through and delete them as part of the solution

I'm having exactly the same issue. For example, there cant be any ambiguity in categorising entries under "Interest on bank or other loans". I'm paying £35pm interest on a bank loan, and categorise the transactions as such. Of the 5 interest transactions entered, only one of these transactions have been correctly allowed, while the other 4 have been disallowed. This is using Quickbooks Self Employed. This is just one example - other transactions are being allowed sometimes and then disallowed for other entries and have been entered in exactly the same manner. Happy to attach examples.