The full answer
What actually decides it.
It can, and the honest answer is that it depends entirely on what the expense was for. A lender does not read your accounts looking for a total. It reads them looking for the income figure it is going to lend against, and expenses are what stand between the two.
Ordinary running costs reduce what you can borrow, and they do so with every lender. High fuel costs, high vehicle costs, the day-to-day cost of working – all of it comes off before the profit figure is struck, and the profit figure is what a lender works from. There is no lender that adds routine expenses back, because as far as the accounts are concerned that money is genuinely gone.
A one-off is a different case. An additional qualification, a piece of equipment, a training course – a cost that hit one year and will not recur – can be treated by some lenders as exactly that. They will look at the previous year to see what your income was before the cost, and at your accountant’s projection to see what it will be once the cost has passed, and lend on that rather than on the depressed year.
What decides it is whether the cost is genuinely non-recurring and whether you can evidence it. Most high street lenders will want your accounts, your SA302 and your tax year overview, and the figure on the SA302 is the one they will use. Getting a one-off looked past is not the default position – it is something a lender agrees to, having been shown why.
So the tax-efficiency question has two different answers depending on which sort of expense you mean. Keeping ordinary costs high genuinely does reduce your borrowing. A single large investment in the business is recoverable with the right lender and the right evidence.
Where lenders differ
- On ordinary recurring expenses there is no split. Every lender works from the profit that is left after them.
- On a one-off cost lenders fall into two camps. Some will not look past the profit figure at all – they will either average your last two years or take the latest one, and both drag your borrowing down. Others will take a more pragmatic view and accept that the item can be excluded.
- The lenders that will exercise that flexibility are often not the high street ones, and they frequently charge a little more for it. That is the trade-off: a higher rate against a materially larger loan.
- Among the flexible lenders, what they want to see it evidenced with also varies – a previous year’s accounts showing the income was stable before the cost, an accountant’s projection for the year ahead, or both together.
An associate who had been trading four years paid for a specialist qualification, at a cost large enough to pull her net profit – and with it her borrowing – below what the purchase needed. Her accountant confirmed the cost was a one-off and that her income was likely to rise the following year as a result of the qualification. A lender, a small one rather than a high street name, worked from that projection alongside the previous year’s accounts, which showed her income had been stable before the cost, and added it back.
Anonymised, and supplied by Wallace Home Finance. One client’s circumstances, not a guide to what yours would be.
Written from Colin Wallace’s typed answers of 24 August 2026 and his recorded interview with Joe Wallace of 26 August 2026 and reviewed by Colin Wallace.