Tax Deductible expenses

As for individuals and trading organisations, expenses are deducted from certain categories of income to arrive at a taxable profit.

Where trustees are engaged in a trade, the trading profit is taxable as a source of income. Profits are calculated in accordance with generally accepted accounting practice. Expenses incurred 'wholly and exclusively' for the purposes of the trade are deducted from trading income. Mostly, it is clear which expenses relate to the trade and are therefore fully deductible, but some expenses will need to be apportioned. In the area of professional Fees, for example, there is likely to be overlap and blending of the purposes for which they are incurred. An obvious example would be the accountancy fees for preparing the trade and trust accounts, particularly if the trading accounts are integrated into the trust accounts. The expenses of running a large trust may include office costs, which for the sake of convenience are combined with the office costs of the trade.