UUÂãÁÄÖ±²¥

Bad debts


Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Bad debts


Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

Bad debts usually arise where goods or services have been provided to a customer, for which payment has not been received within a reasonable or specified time period, or for which the customer is unable to pay. It is necessary to determine the quantum of relief that can be claimed for bad debts when calculating the profits of a trade.

Most trading bad debts are money debts which, for companies, fall under the rules for loan relationships as ‘relevant non-lending relationships’. Broadly, a money debt is one falling to be settled by the payment of money or the issue or transfer of shares. See the Corporate debt ― overview guidance note for more information.

Debts that fall within either the derivative contracts or the intangible fixed assets regimes are also excluded from the rules covered in this guidance. See the Derivative contracts of Corporate Tax guidance and What is an intangible fixed asset? guidance notes for information on these topics.

The bad debt rules do not apply to money and non-money debts for sole traders and partnerships

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+â„¢
TAKE A FREE TRIAL NOW
Powered by
  • 02 May 2025 07:40

Home/ Tolley Tax Guidance/ Owner-Managed Businesses / Calculating trading profit and loss

Popular Articles

Owner-Managed Businesses

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more Read more
Corporation Tax

Double tax relief

Double tax reliefWhen income arises in a foreign country to a UK resident company and that income is taxable in that foreign country, the UK may give the company relief for the foreign tax by crediting the foreign tax against the UK tax charged on that income. This might include withholding tax on

14 Jul 2020 11:31 | Produced by Tolley Read more Read more
Personal Tax

Interest and penalties on late paid tax under self assessment

Interest and penalties on late paid tax under self assessmentInterestIf the capital gains tax, the balancing payment or payments on account of tax and / or Class 4 national insurance contributions (NIC) are paid late, HMRC will charge interest on the amount overdue from the original due date. The

14 Jul 2020 12:00 | Produced by Tolley Read more Read more