Expenses incurred to acquire, ensure and maintain income are deductible on an accrual basis. Certain expenses, such as certain gifts and income taxes, are not deductible. 7.2 Inventories Inventory can be valued at a cost of market value. Only FIFO is acceptable. 7.3 Capital receipts Capital receipts are excluded from taxable trading income.
Capital expenditure is deductible, although depreciation is available.
The same rule normally applies to dividends from subsidiaries abroad. Ships are written off under the same rules as machinery and equipment. Office buildings , car parks, etc., which cannot be depreciated on their own, may, if associated with buildings entitled to depreciation, be depreciated in the same way as the buildings which they are connected. Furthermore, it is possible to write off expenses for rationalisation, research and development when such costs cannot be charged against income. Limited advance depreciation is permitted on certain machinery.