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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 2 National Insurance contributions: Small Earnings Exception: How Net Profit is calculated

The net profit figure is arrived at by deducting from the gross business takings or earnings the cost of goods sold and the day to day operating expenditure. Guidance on capital expenditure, which is not deductible, is at NIM21007, and on admissible expenses at NIM21011. It should be remembered that the profit or loss follows accountancy principles and is not necessarily the profit or loss for income tax purposes [Accountancy bodies issue Statements of Standard Accountancy Practice (“SSAPs”) to clarify how certain items should be treated in accounts].