PART IV PROVISIONS RELATING TO THE SCHEDULE D CHARGE

C1CHAPTER V COMPUTATIONAL PROVISIONS

Annotations:
Modifications etc. (not altering text)
C1

See—1979(C) s.122—election to take capital gain or loss into account when asset appropriated to stock in trade.1989 ss.67-74—employee share ownership trusts.Banking Act 1987 (c.22) s.66—contributions to the Deposit Protection Fund.

Deductions

C474 General rules as to deductions not allowable.

F11

M1Subject to the provisions of the Tax Acts, in computing the amount of the profits or gains to be charged under Case I or Case II of Schedule D, no sum shall be deducted in respect of—

C2a

any disbursements or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation;

C2b

any disbursements or expenses of maintenance of the parties, their families or establishments, or any sums expended for any other domestic or private purposes distinct from the purposes of the trade, profession or vocation;

c

the rent of the whole or any part of any dwelling-house or domestic offices, except any such part as is used for the purposes of the trade, profession or vocation, and where any such part is so used, the sum so deducted shall not, unless in any particular case it appears that having regard to all the circumstances some greater sum ought to be deducted, exceed two-thirds of the rent bona fide paid for that dwelling-house or those offices;

d

any sum expended for repairs of premises occupied, or for the supply, repairs or alterations of any implements, utensils or articles employed, for the purposes of the trade, profession or vocation, beyond the sum actually expended for those purposes;

e

any loss not connected with or arising out of the trade, profession or vocation;

f

any capital withdrawn from, or any sum employed or intended to be employed as capital in, the trade, profession or vocation, but so that this paragraph shall not be treated as disallowing the deduction of any interest;

g

any capital employed in improvements of premises occupied for the purposes of the trade, profession or vocation;

h

any interest which might have been made if any such sums as aforesaid had been laid out at interest;

F2j

any debts except—

i

a bad debt proved to be such;

ii

a debt or part of a debt released by the creditor wholly and exclusively for the purposes of his trade, profession or vocation as part of a relevant arrangement or compromise; and

iii

a doubtful debt to the extent estimated to be bad, meaning, in the case of the bankruptcy or insolvency of the debtor, the debt except to the extent that any amount may reasonably be expected to be received on the debt;

k

any average loss beyond the actual amount of loss after adjustment;

l

any sum recoverable under an insurance or contract of indemnity;

m

any annuity or other annual payment (other than interest) payable out of the profits or gains;

n

any interest paid to a person not resident in the United Kingdom if and so far as it is interest at more than a reasonable commercial rate;

F3o

any interest in so far as the payment of that interest is or would be, otherwise than by virtue of section 375(2), either—

i

a payment of interest to which section 369 applies, or

ii

a payment of interest to which that section would apply but for section 373(5);

p

M2any royalty or other sum paid in respect of the user of a patent;

C3q

any rent, royalty or other payment which is by section 119 or 120 declared to be subject to deduction of tax under section 348 or 349 as if it were a royalty or other sum paid in respect of the user of a patent.

F42

In paragraph (j) of subsection (1) above “relevant arrangement or compromise” means—

a

a voluntary arrangement which has taken effect under or by virtue of the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989; or

b

a compromise or arrangement which has taken effect under section 425 of the Companies Act 1985 or Article 418 of the Companies (Northern Ireland) Order 1986.