BIM42060 | Deductions: general: prohibitive rules
From HM Revenue & Customs · Business Income Manual
The following table summarises the general prohibitions and restrictions on deductions in computing trade profits and indicates where more detailed guidance may be found. These prohibitions are, however, subject to the priority rules at .
| section | section | Prohibition or restriction | Further guidance |
|---|---|---|---|
| 33 | 53 | No deduction of items of a capital nature. | onwards |
| 34(1)(a) | 54(1)(a) | No deduction for expenses not incurred wholly and exclusively for the purposes of the trade. | onwards |
| 34(1)(b) | 54(1)(b) | No deduction for losses not connected with or arising out of the trade. | - |
| 35 | 55 | No deduction for any debts except: i. bad debts; and ii. a debt (or part) released by a creditor wholly and exclusively for the purposes of the trade as part of a statutory insolvency arrangement; and iii. a doubtful debt to the extent that it is estimated to be bad. For Corporation Tax, this rule applies only to non-money debts (as money debts fall within the loan relationship regime). | onwards |
| 36 | 1288 | No deduction for employees’ remuneration charged in the accounts for a period of account but not paid within nine months of the end of the period. (A deduction is allowed, however, when the remuneration is paid.) | onwards |
| 38-44 | 1290-1297 | No deduction for employee benefit contributions unless benefits are provided etc within nine months of the end of the period of account. (A deduction is allowed, however, when the benefit is provided.) | |
| 45-47 | 1298-1300 | No deduction for certain business entertainment and gifts. | onwards |
| 48-50B | 56-58B | Restricted deduction for hire charges paid for certain motor cars. | onwards |
| - | 59 | No deduction for any royalty or other sum paid for the use of a patent. This rule applies to Corporation Tax only but for most patent royalties it is overridden by the rules of the intangible fixed assets regime (see onwards). | |
| 52 | - | No deduction for interest for which relief is given under certain other provisions. This rule applies to Income Tax only. Interest paid by companies is dealt with under the loan relationships regime (see onwards). | |
| 53 | 1302 | No deduction for National Insurance contributions other than employers’ Class 1, Class 1A and Class 1B contributions. | |
| 54 | 1303 | No deduction for any specified tax penalty, interest or VAT surcharge. | - |
| 55 | 1304 | No deduction of expenditure the making of which is a criminal offence or which is induced by blackmail. | onwards |
| 55A | 60 | No deduction for certain expenditure on an integral feature of a building or structure. | onwards |
| 55B | 60A | Restriction on the deduction of a rental rebate payable under a plant or machinery lease. | - |
| - | 1301A | For Corporation Tax, no deduction is allowed for interest otherwise than under the loan relationship regime. | onwards |
| - | 1301B | For Corporation Tax, no deduction is allowed for qualifying charitable donations under the Gift Aid scheme (relief being given by deduction from the company’s total profits). | - |