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Expenditure incurred for the purposes of the trade

B2.315 The concept of wholly and exclusively

The tax legislation provides that no deduction is generally available for any expense which is not wholly and exclusively incurred for the purposes of the trade¹. ITTOIA 2005 and CTA 2009 do not attempt to set out a test for determining whether expenditure is 'wholly and exclusively' incurred for this purpose.

The question whether expenditure is capable of satisfying the 'wholly and exclusively' test has been held to be one of law².

Once this is established, it is a question of fact whether it is incurred wholly and exclusively for the purposes of the trade³.

Even where it can be determined that an item of expenditure has been incurred wholly and exclusively, other factors, such as whether the item is capital or revenue, or whether there are any specific statutory provisions which deny a deduction, must also be considered. See B2.304.

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