Sarah Bradford outlines the rules governing whether an expense incurred by a self-employed trader can be deducted in calculating their taxable profit.
No one wants to pay more tax than they need to. However, this is exactly what will happen if you fail to take account of all allowable expenses in calculating your taxable profit. It is important, therefore, that as a self-employed trader, you keep accurate records of the expenses that you incur in running your business, and you also understand what can be deducted – and what cannot.
The general rule
The basic rule is that a deduction is allowed for expenses incurred wholly and exclusively for the purpose of the trade. This means that as long as an expense is incurred for the purposes of the business and only for that purpose, a deduction is given.
Unlike the rule governing the deductibility of
