Income Tax (Trading and Other Income) Act 2005 section 34

Expenses not wholly and exclusively for trade and unconnected losses

Section 34 sets out the rules governing which expenses and losses may be deducted when calculating the taxable profits of a trade, including the treatment of dual-purpose expenditure.

• No deduction is allowed for expenses not incurred wholly and exclusively for the purposes of the trade
• Losses that are not connected with or arising out of the trade are similarly disallowed
• Where an expense serves more than one purpose, an identifiable part or proportion relating solely to the trade may still be deducted
• Apportionment is only permitted where a distinct trade element of the expenditure can be identified; if the trade and non-trade purposes are inseparable, no deduction is available at all