Class 2 National Insurance contributions: Small Earnings Exception - How Net Profit is calculated: Capital items
Capital items are not normally included in the profit and loss account.
The assets of a business which are retained and used to earn profits are termed capital items and include business premises, plant, machinery and vehicles. This is a different concept to the trader’s stock which is sold to make a profit.
Machinery is self-explanatory but “Plant” causes some difficulties in interpretation. Plant means the apparatus used by the business, ie fixed or movable goods which are kept for permanent employment in the business rather than the goods obtained for resale. Examples are movable office or shop partitioning, display, shelving and storage units, tables, cupboards, etc. See the Inspector’s Manual (IM). For more detailed information and consult an Inspector dealing with business accounts if necessary.