Is your dog tax deductible?

Approximately 9.9 million adults in the UK own dogs, which is around 26% of UK adults. Dogs noses are wet to help them absorb scent chemicals, which they lick to sample. A bloodhound has such a good sense of smell that it can be used in a court of law. Three dogs even survived the Titanic. I could go on…

As interesting as this, is your dog tax deductible and able to be claimed as a business expense? And if so, when and how much can you claim? Not only are there many different breeds of dog, they also have many different roles to play and the tax consequences differ as a result, be they working dogs, guard dogs, office dogs, therapy dogs or assistance dogs.

The basis for the treatment comes down to the basic tax principle; is the expense incurred wholly and exclusively for the purpose of the business? This will determine if none, part or all of the expenses incurred can be claimed as a legitimate business case. Each circumstance should be examined on a case-by-case basis, but below we explore more about the general principals.

Working dogs

Starting with the easiest one. If you have a working dog, such as a farm or guard dog, the ongoing care costs of looking after them are potentially allowable.

The costs purchasing them can even be treated as ‘plant’ for capital allowance purposes, so you get full relief for the costs of purchasing them.

VAT can also be recovered on the costs of feed and vet bills, if the business is VAT registered.

The complexity comes where the dog forms part of the family and for example lives in the family home. However, this is normally treated as incidental to their role as a working dog, so shouldn’t impact the tax treatment.

Did you know that where farm employees are required to keep a dog(s) as part of their duties, they can claim a weekly dog allowance of £7.63 per dog per week, which is not subject to tax. Nice!

Guard dogs

Now whilst a guard dog, required to keep your business premises safe can of course be a business expense, you also need to be realistic. I’m not sure for example how good a Chihuahua would be at this role. Pardon the pun but their bark is definitely worse than their bite.

As with working dogs, they can be treated as ‘plant’ for capital allowance purposes, if indeed they are guard dogs.

The fun comes somewhere between a Rottweiler and a Chihuahua, especially where the dog is both a guard dog and a family pet. Some may look to apportion costs between work and personal, but this could be difficult to defend with HMRC. If asked would you consider your dog to be a guard dog or a family pet?

Office dogs

There is a lot of support that having dogs in the workforce can be a low-cost and effective way to boost well-being and productivity.

However, if it belongs to the boss and goes home with the boss (AKA doggie day care), it would be very difficult to argue that any costs incurred are for the business, as great as it can be for social media, they are likely to be considered a pet, so their costs cannot be claimed against the business.

Therapy Dogs

Pets can be a key part of therapy in care homes, hospitals and schools to name but a few places. If you are self-employed and use a dog for this very reason with the large amount of expenses for them to be suitable for this specialised role, there may be a case here for their expenses to be deducted against your business.

There are other indicators for the dog being used for therapy. For example, is it a special breed particularly suitable for such a role, does it have special training, do you advertise the dog as part of the therapy you provide, does the dog have regular rest breaks and do patients request the dog?

Here if the dog is taken home at the end of a working day, it can be considered incidental, as with Working dogs above.

Assistance dogs

HMRC has clear guidance for blind employees who have guide dogs at their own expense in order to perform their duties as employees. Here reasonable costs of keeping and replacing the guide dog can be claimed but allocations between business and private use shouldn’t be made.

Whilst HMRC Manuals are not as clear for hearing and other assistance dogs, where the dogs are highly trained and required for an employee to perform their role, the same rules are likely to apply.
Similarly, there is no clear guidance for self-employed individuals, it would be hard to argue the case would be any different to employees.

Black and White Accounting

Tax isn’t always simple; not only is there the tax legislation, there is also a mammoth amount of tax cases in which to navigate in order to keep you on the right side of the law. That’s why having an Accountant as your business partner is key to you continuing to succeed; not paying more tax than you need to, but also not taking unnecessary risks either. It’s a short leash and we want to keep you out of HMRC’s doghouse. Sorry!

If you are not sure how to treat an expense, what you can or cannot claim, get in touch with our specialist team today. Email us, complete the ‘Got a Question’ form on the right hand side, or call us today on 0800 140 4644. We look forward to talking further with you.