If you are thinking of using Invoice Factoring you may want to know, are factoring fees tax deductible?
There are a number of fees associated with using invoice factoring and other types of invoice finance. For example service fees, interest and discounting fees. Learn more about the Costs of Factoring.
So are these service fees and interest deducible?
Are Invoice Factoring Fees & Interest Tax Deductible?
The simple answer is yes Factoring fees are tax deductible. Provided funds are being used purely for business purposes, then factoring fees & interest are classed as a business expense. However I would recommend speaking to qualified accounting professional to discuss you individual circumstances.
When you take out an invoice factoring facility, your trade debtors will remain as an “Asset” on your Balance Sheet. Any funds draw down on the facility will sit as a “Liability” on your balance sheet.
Any fees and charges related to having an invoice factoring or discounting facility will be deducted form pre-tax profits on your P&L.
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