There will be marginal relief for profits between 10,000 and 50,000. The normal rule is that revenue expenses incurred wholly and exclusively for the purposes of the trade are deductible from trading income. Investment companies may deduct expenses of management. Generally, expenses are determined using the accruals concept and normal principles of accountancy. From 1 April 1996, subject to transitional rules, interest and other costs of borrowing are generally deductible in the accounting period in which they are charged in the accounts.
Care needs to be taken if the loan etc is for a 'non-trading' purpose.
Most pension contributions are deductible in the accounting period in which payment is made. However, relief for special contributions may be spread over a period of up to four years. Remuneration for directors and employees must be paid before the expiry of nine months following the end of the accounting period if relief is to be obtained in that period. Bonuses paid later than this are deductible in the accounting period in which payment is made. Net gains are included in the calculation of profits chargeable to corporation tax.