NIM21007 - Class 2 National Insurance Contributions: Small Earnings Exception: How Net Profit is calculated: Capital expenditure

In calculating net profits, no account was taken of the basic cost of obtaining or extending capital items. For example, the cost to a butcher of a new van, or to a grocer of a freezer, was not a deductible expense. Allowance could be made for interest on loans taken out to purchase a capital item, the rental costs if leased rather than bought or the cost of repairs to the items to keep them in a working state. Allowance could also be made for depreciation of the asset even though it was not allowed for tax purposes.