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Posted Tue, 22 Jun 2021 23:10:01 GMT by Keval
If I am a sole trader that has revenue of for example £50000, and expenses (new car lease etc) of £7000 per year why does the take home pay reduce as I increase the expenses. Should the expenses not reduce the tax liability and therefore increase the take home pay? I am a basic rate tax payer.
Posted Thu, 24 Jun 2021 14:47:38 GMT by HMRC Admin 9

Your expenses should reduce your overall net profit, which is what the tax liability is worked out on. Generally speaking the higher the expenses the less the net profit and therefore less tax.

If this is not the case, when you are submitting your return then it may be best to contact HMRC to see why:

Self Assessment: general enquiries

Thank you. 

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