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HMRC internal manual

National Insurance Manual

Class 2 National Insurance contributions: Small Earnings Exception: How Net Profit is calculated: Capital expenditure

In calculating net profits, no account is 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, is not a deductible expense. Allowance can 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 can also be made for depreciation of the asset even though it is not allowed for tax purposes.