Find solution
When is tax deducted in each tax year?

If you incur legal expenses in 2007,but pay them in 2008, which tax year are they deducted?

  • We paid in 2008 business legal expenses incurred in 2007, which year are they deductible in?

  • Answer:

    In the UK, ALL accounts are prepared on an accruals basis(you don't have a choice), so they are deductible in 2007 accounts year.

SOSY at Yahoo! Answers Visit the source

Was this solution helpful to you?

Other answers

2008. Personal income taxes are based on the cash method, not accrual

Ryan M

First thing you have to find out is what accounting method did your firm use. Did your firm report income on a cash basis or accrual basis. If your firm reported income on a cash basis, then, expenses incurred at the time when the legal fee is paid (2008). However, if your firm reported income on an accrual basis, then, the expenses incurred when the legal fee was charged(2007). If this is the first time your firm file income tax return, then, you have the option to choose which method you want to use. I believe you were talking about business legal expenses, not personal legal expenses. In accounting, we all have to learn the basic things. It does not matter what the tax law says. Income tax law change from time to time and it is different from country to country. What I explained to you is the technique you should use. What method is allowed or not allowed is up to you to find out from your tax department.

Henry W

Go with One Step Down from God's answer. So far it's the only right one for the UK. The other two answers are probably right for the USA.

David H

Related Q & A:

Just Added Q & A:

Find solution

For every problem there is a solution! Proved by Solucija.

  • Got an issue and looking for advice?

  • Ask Solucija to search every corner of the Web for help.

  • Get workable solutions and helpful tips in a moment.

Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.