5/16/2023 0 Comments Uk contractor expenses limits![]() ![]() General rules for trading expensesĪ trading company is generally permitted to deduct expenses that are incurred wholly and exclusively for the purposes of the company's trade, provided those costs are not capital in nature and are charged to the profit and loss account. We have therefore set out the general rule for trading expenses, being the most common category, and, following that analysis, considered some specific common exceptions. The regime also has a large number of specific rules dealing with particular types of deductions that take priority over the more general rules for each type of income. For example, there is a considerable difference in the manner in which tax relief is given for expenses incurred by companies trading in property as compared to those that invest in property. The rules governing their deductibility differ according to whether the expense relates to a capital gain or to income, and, indeed, according to the particular source of income concerned. Expenses are usually allocated to the source of income (or occasionally by reference to income generally) or to the particular gain to which they relate. This approach gives rise to a particularly complicated regime so far as deductions are concerned. As noted in the Income determination section, the UK tax system requires taxable profits to be calculated by aggregating (i) the company's net income from each source and (ii) the company's net chargeable gains arising from the sale of capital assets. ![]()
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