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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 7107
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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My son started a locksmith business a year ago via a

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Hi. My son started a locksmith business a year ago via a franchise. He has to do a tax return for Feb and March of last year. He is going to visit an accountant for this year's taxes etc, but just needs to complete those two months. He paid a franchise fee of £25000. Are the following elements tax deductible please? Tools/stock, stationery, ipad (only work is done on there and is linked to franchisor for jobs etc), uniform, website design (all those were part of £25K franchise fee), signwriting on van, extra security locks on van, public liability insurance, monthly fee for Google Ads, Communications fee to franchisor, franchise commission at 15% per job, mileage @ 45 p per mile, business part of phone bill. The thing we're most unsure of is the training element, ie as part of the franchise fee, £4250 was for initial training. Is this eligible, as I have read something about difference between new training/existing training?
JA: Which tax year is the deduction for?
Customer: 2018/19
JA: Anything else you want the Accountant to know before I connect you?
Customer: I just wanted to know what was tax deducatable really as that tax year is all about him starting his business as a sole trader.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question

Initial training would not be allowable for tax purposes.

The rest of expenses including franchise fee are all tax allowable.

If the franchise is for say 5 years then fee is chargeable over this period.

You may have a loss in the first period of trading but this loss can be carried forward against future profits.

My aim is to give you aprofessional service. I hope this is helpful and answers your question.

Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.

Customer: replied 6 months ago.
Thank you. Sorry, when you say if the franchise is over 5 years (which it is), the fee is chargeable over this period, do you mean the 15% commission on each job or the actual £25K initial fee? Training is included in that fee, so I broke it down to include stock, stationery, iPad etc, as everything is itemised on the franchise agreement.
Customer: replied 6 months ago.
No thank you. If you could answer that one question via a typed response that would be great, if not, that's fine.

Thank you for your reply.

My apologies for the delay in my response as I was away from my desk.

I am referring to initial fee. Commisiion will be expensed as paid (in the year commission relates to).

- Stock will be capitalised and written off to cost of sales as and when used

- stationery and iPad can be expensed in Year 1

- initial fee excluding training to be amortised over 5 years

I hope this is helpful and answers your question.

Customer: replied 6 months ago.
thank you very much for your help.

Thank you for yourreply.

I hope this is helpful and answers your question.

If there are no more issues, I will appreciate if you would kindly rate my service by selecting the 5 stars at the top of the screen before you leave, to ensure I get credited for it by Just Answer today. and 2 other Tax Specialists are ready to help you