INCOME TAX 
323 
[The deductions include a special allowance, which is generally 
to the greater advantage of the company—uide Deductions 
(1).] 
(2) Rates, repairs and insurance of properties in the 
United Kingdom let to tenants of the company. 
(3) All royalties on patents, mortgage, debenture and 
other annual interest and annuities charged. The company 
has the right of deduction of tax therefrom, and in having 
this included in its liability is acting, so to speak, as the 
agent of the revenue. (But special considerations arise on 
Interest Accounts dealt with later on.) 
(4) All reserves for leasehold redemption, debenture 
redemption, preliminary expenses, and anything of the 
nature of the gradual amortisation of capital. 
(5) Provision for wear and tear of plant, etc. (specially 
dealt with as a deduction from the assessment itself, see 
below). Renewals of plant and machinery and capital 
assets (see Depreciation or Wear and Tear Allowance). 
(6) Income tax charged as an expense in the accounts. 
(7) All sums employed as capital, or capital withdrawn 
or lost. 
(8) Any sums expended in improvements of premises or 
written off as depreciation of land, buildings, or leases. 
(9) Any losses not connected with, or arising out of, the 
trade. These are discussed at greater length below. 
DEDUCTIONS FROM TRADING PROFIT 
(x) The net Schedule A assessment on all property owned 
and occupied for the purposes of the business (in lieu of 
No. 1 above) because duty has already been paid upon this 
sum. In the case of mills, factories, or similar premises, 
the deduction allowed is the gross and not the net assessment 
—so that the company gets, in addition to any actual repairs 
charged in the accounts, the one-sixth of the Schedule A 
(upon which no duty has been paid) to allow for depreciation 
and obsolescence. 
In the case of premises abroad no duty has been paid 
under Schedule A, and so no deduction is allowable for a 
Schedule A assessment, but for mills, factories, etc., a sum 
is deductible equivalent to one-sixth of the annual value 
arrived at as though a Schedule A assessment could be or had 
been made. 
(2) In the case of obsolete machinery which is disposed 
of and other machinery acquired in its place, a deduction may 
be made from the profits of the vear in which the replacement