What Is Sundry Expenses

Introduction

At Towerstone, we provide accountancy services in Bedford to local sole traders, landlords, and limited companies. We have written an article about What Is Sundry Expenses to help you understand what sundry expenses actually cover, and when a clearer category should be used.

Sundry expenses is one of those accounting terms that appears regularly in accounts tax returns and bookkeeping software yet often causes confusion. From experience I find that people either overuse it or avoid it entirely because they are unsure what should sit under it. Both approaches can create problems.

In simple terms sundry expenses is a temporary or minor expense category used to record small irregular business costs that do not justify their own dedicated heading. Used properly it keeps accounts tidy and practical. Used badly it can raise red flags with HMRC and make your figures harder to understand.

In this article I explain exactly what sundry expenses means who it is for how it should be used in practice and when it should not be used at all. I will also cover the tax treatment common mistakes I see and how Bedford accountants typically advise clients to handle sundry expenses correctly so their accounts remain clear compliant and defensible.

What Are Sundry Expenses?

Sundry expenses also referred to as miscellaneous expenses are small incidental business costs that are not frequent enough or significant enough to warrant a separate expense category.

From an accounting point of view they act as a catch all for minor costs that arise occasionally and do not fit neatly into existing headings such as office costs travel or professional fees.

The key word here is minor. Sundry expenses should never be a dumping ground for large or unclear costs.

Examples of costs that might reasonably fall under sundry expenses include:

• Small bank charges not already categorised

• Minor postage or courier costs

• Occasional stationery purchases

• Small one off admin fees

• Minor software add ons or tools used infrequently

From experience sundry expenses work best when they are genuinely incidental rather than routine.

Why Sundry Expenses Exist in Accounting

Accounting is about clarity as much as accuracy. If every small expense had its own category accounts would become cluttered and harder to read.

Sundry expenses exist to keep financial records manageable while still capturing all allowable costs.

From experience this category is particularly useful for small businesses sole traders and early stage companies where costs are varied but relatively low in value.

However as a business grows reliance on sundry expenses should reduce rather than increase.

Who Uses Sundry Expenses?

Sundry expenses can appear in the accounts of:

• Sole traders and self employed individuals

• Partnerships

• Limited companies

• Landlords with rental accounts

They are more common in smaller businesses but they can appear in larger sets of accounts provided they are controlled and immaterial in value.

From experience HMRC and accountants expect to see some sundry expenses but they also expect them to be reasonable.

How Sundry Expenses Are Treated for Tax

Sundry expenses are not a special tax category. They are treated in exactly the same way as any other business expense.

If the cost is wholly and exclusively for business purposes it is usually deductible for income tax or corporation tax regardless of whether it sits under sundry expenses or another heading.

The tax deductibility depends on the nature of the cost not the label used.

This is important. Calling something a sundry expense does not make it allowable. HMRC looks through the label to the substance of the expense.

From experience problems arise when personal or unclear costs are hidden within sundry expenses.

Examples of Allowable Sundry Expenses

To make this practical here are examples of sundry expenses that are typically allowable if they relate to business activity:

• Small business related bank charges

• Occasional printing or copying costs

• Minor office supplies bought infrequently

• Small transaction fees

• Low value tools or accessories

Each of these would be allowable if they are genuinely incurred for business purposes.

The amounts involved should usually be small. If you find large totals building up under sundry expenses it is a sign that costs need reclassifying.

Examples of Costs That Should Not Be Sundry Expenses

From experience I see sundry expenses misused in predictable ways.

Costs that should not be included include:

• Regular monthly expenses

• Large one off purchases

• Personal expenses

• Costs that have their own clear category such as travel advertising or software

• Unexplained cash withdrawals

For example if you pay for accounting software every month that should sit under software or admin costs not sundry expenses.

If you regularly travel for work those costs should be categorised properly rather than bundled into sundry expenses.

Why HMRC Pays Attention to Sundry Expenses

HMRC pays attention to sundry expenses because they can be used to obscure detail.

A small sundry expense figure is normal. A large one invites questions.

From experience HMRC may query sundry expenses during a compliance check especially if:

• The figure is high relative to turnover

• The business reports losses

• There are few other expense categories

• Records are poor

HMRC may ask for a breakdown of sundry expenses to understand what they relate to. If you cannot explain or evidence them the costs may be disallowed.

This is why good record keeping matters even for small expenses.

Sundry Expenses and Bookkeeping Software

Most accounting software includes a sundry or miscellaneous expense category by default.

This can be helpful but it can also encourage lazy bookkeeping.

From experience I advise clients to use sundry expenses sparingly and review them regularly. If the same type of cost appears more than once or twice it probably deserves its own category.

For example if postage costs start appearing monthly they should be moved out of sundry expenses into a postage or delivery category.

Good bookkeeping is not about speed alone. It is about clarity.

How Accountants Prefer Sundry Expenses to Be Used

From an accountant’s point of view sundry expenses should meet three criteria:

• Small in value

• Infrequent

• Clearly business related

If those criteria are met the category does its job.

When reviewing accounts I always look at the sundry expenses balance. If it is immaterial and supported by receipts there is usually no issue. If it is large vague or unsupported it becomes a discussion point.

For limited companies especially sundry expenses should be modest. Large balances can complicate year end accounts and corporation tax computations.

Sundry Expenses for Self Employed Individuals

For sole traders sundry expenses are common especially in the early stages of a business.

From experience self employed people often incur varied small costs that do not fit neatly into predefined boxes.

The key is discipline. Keep receipts note what each expense relates to and avoid using sundry expenses as a shortcut.

If your business grows and sundry expenses remain high it is time to refine your categories.

Sundry Expenses for Limited Companies

Limited companies should be more cautious.

Company accounts are more visible and often reviewed by external parties including lenders investors and HMRC.

From experience I advise limited companies to keep sundry expenses to a minimum and ensure anything significant is categorised properly.

Directors should also be careful not to put personal costs through sundry expenses. This is a common mistake and can create director loan account issues.

Sundry Expenses and VAT

If you are VAT registered sundry expenses can still include VAT reclaimable costs provided the underlying expense is valid.

However VAT must still be treated correctly. The fact that a cost sits in sundry expenses does not change VAT rules.

You can reclaim VAT on sundry expenses only if:

• The expense is VATable

• You have a valid VAT invoice

• The expense relates to taxable business activity

From experience VAT errors often occur when sundry expenses are not reviewed carefully.

Record Keeping for Sundry Expenses

Good record keeping applies to sundry expenses just like any other cost.

You should retain:

• Receipts or invoices

• Bank or card statements

• Notes explaining the purpose of the expense

HMRC expects evidence even for small costs. The size of the expense does not remove the requirement to justify it.

Cloud accounting software makes this easier by allowing receipts to be attached directly to transactions.

Common Mistakes I See With Sundry Expenses

There are a few recurring issues I see regularly.

One is overuse. Too many costs are placed into sundry expenses because it feels convenient.

Another is lack of explanation. Transactions are recorded with no description which makes later review difficult.

I also see personal expenses hidden within sundry expenses which is risky and often disallowed.

Finally sundry expenses are sometimes used to force accounts to balance rather than reflect reality. This is never a good idea.

How Sundry Expenses Fit Into Good Tax Planning

Sundry expenses should support clarity not undermine it.

Clear expense categorisation helps with tax planning because it allows patterns to be identified. If everything is bundled together opportunities are missed.

For example seeing rising software costs or increasing travel expenses allows for better budgeting and planning.

From experience businesses with clean expense categories make better decisions and face fewer issues with HMRC.

A Real World Example From Experience

Consider a small Bedford based consultancy.

In the first year sundry expenses were modest and included small admin costs. As the business grew the sundry balance increased significantly.

On review we identified that many costs were actually recurring software subscriptions and marketing tools. By reclassifying them the accounts became clearer and the business owner gained better insight into where money was going.

HMRC later reviewed the return and no issues arose because records were clear and explanations straightforward.

Should You Avoid Sundry Expenses Altogether?

No. Sundry expenses have a valid place in accounting.

The goal is not to eliminate them but to control them.

From experience a small sensible sundry balance is a sign of practical bookkeeping. A large vague one is a warning sign.

When to Seek Advice

If you are unsure whether something should be a sundry expense or whether your sundry balance is too high it is worth asking your accountant.

A short conversation can prevent future problems and help keep accounts compliant and understandable.

The key takeaway

Sundry expenses are a simple concept but they are often misunderstood.

Used properly they keep accounts tidy and practical. Used badly they create confusion and attract unwanted attention.

The rule I always come back to is this. If you can explain the expense clearly and justify it as business related you are on the right track. If you cannot it probably does not belong there.

Keeping sundry expenses small supported and sensible is one of the easiest ways to improve the quality of your accounts and reduce risk.

If in doubt treat clarity as the priority and seek advice before habits form.

If you would like to explore related guidance, you can visit our Bedford Accounting Hub, which brings together practical advice for Bedford clients.