Expenditure on Personal Security

As political disagreements and  questions over businesses’ policies and products become more strident both online and offline, directors and managers sometimes fear for their and their families safety.  A decision by a business to upgrade personal security and protection can have favourable tax consequences


The legislation is contained in S81 Income Tax (Trading and Other Income) Act 2005 which states that a tax deduction for personal security expenses applies to expenditure incurred in connection with the use or provision of an asset or service which improves personal security.

Conditions to be met

All the following conditions must be satisfied for a deduction for personal security expenditure to be allowable:

  • there is a special threat to the trader’s personal physical security which arises wholly or mainly because of the particular trade;
  • a service or asset is provided or used by or provided for the trader to meet the threat;
  • the sole object of the person incurring the expenditure is the meeting of the threat;
  • a deduction of the expenses would not otherwise be allowable in calculating the profits of the trade because (and only because) they were not incurred wholly and exclusively for the purpose of the trade;
  • in the case of a service, the benefit resulting to the trader is wholly or mainly an improvement of the trader’s personal physical security;
  • in the case of an asset, the person incurring the expenditure intends the asset to be used solely or partly to improve personal physical security.

The conditions are intentionally tightly drawn and are intended for people whose trade exposes them to a very real threat to their physical safety from terrorists, extremists and others who may resort to violence. It follows that a deduction cannot be given for:

  • security measures against the kind of general criminal threat which all citizens may face to a greater or lesser degree, for example when travelling home late from work; or
  • expenditure incurred primarily to meet a threat to property (including cash and other personal belongings); or
  • security measures taken against a threat unconnected with a person’s trade.

Qualifying security assets

’Asset’ includes equipment and a structure such as a wall. So, items such as alarm systems, bullet resistant windows, floodlighting, reinforced doors and windows and perimeter walls and fences will qualify. The right to a deduction is not affected by the fact that the asset may become fixed to land or that the trader may be or become entitled to the property in the asset (or, if the asset is a fixture, to any interest or estate in the land concerned).

Rent paid to concerns specialising in the provision of alarm systems is allowable. Any installation charges which the trader is called upon by the agreement with the supplier to incur will normally be disallowable capital expenditure, although capital allowances may be available.

Non-qualifying assets

The following do not qualify as security assets:

  • cars, ships or aircraft,
  • living accommodation,
  • a dwelling,
  • grounds appurtenant to a dwelling.

Qualifying Services

A service includes such things as the provision of security guards or bodyguards.

Mixed use of asset

Where an asset is intended to be used partly to improve personal physical security, only an appropriate proportion of the expenditure on the asset is to qualify for a deduction. The appropriate proportion is that attributable to the intended use to improve physical security.

If the provider intends that asset to be used solely to improve personal physical security, but there is another use for the asset which is incidental to that purpose, the trader is still entitled to a deduction of the whole of the cost or expenses. For example the cost of bullet resistant windows can be allowed in full although they have incidental non-security use in keeping out the cold.

The fact that the provision of an asset or service also improves the personal physical security of other members of the trader’s family or household does not prevent the full amount of the expenditure from qualifying for a deduction.

Security provided by an employer

If any of the above assets or services are provided by a company to its directors, they will not normally be treated as a benefit in kind.  As a result no PAYE or National Insurance contributions will be due.


Rashid is the director of a pharmaceutical company, which has been mentioned in the newspapers as carrying out tests on animals.  Despite his denials, he has received a number of threats by post and email.  Fearful for his own safety and that of his family, he takes immediate step to protect his home against intruders and violent protestors.

He installs a state of the art burglar alarm and intruder detection system, motion detection external lighting, clamber proof railings, bullet proof glass and armoured doors.  All of this expenditure is borne by his company.  Since there is a well-founded threat to  him and his family, all this expenditure is deductible for corporation tax and there will be no benefit-in-kind charged to him.

Joanna runs her business from home.  She sells handcrafted silver jewellery via the internet and keeps around £10,000 in her spare -room which double as her office. Concerned by a state of local break-ins, she decides to equip her house with a burglar alarm and upgrade her front door.

HMRC reviewed her expenditure claim and disallowed 80% on the basis that the percentage of space in her house used for business was 20% and that there was no specific threat to her home compared to any of property in her location.

SRC-Time are one of the South East’s leading accountancy firms in advising the self-employed and partnerships in all aspects of their tax affairs and we are able to assist in any issue raised above.

Our expert team is available to provide you with advice and can be contacted on 01273 326 556 or you can drop us an email at info@src-time.co.uk  or speak with an account manager to get any process started.

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