When working out the profits or losses of your business, you can deduct any allowable expenses that you incur in running your business to arrive at the profit (or loss) figure before tax. The more expenses you deduct, the lower your taxable profit and the less tax you pay.
The following excerpt is from our popular How to Maximise Deductions for Business Expenses report and explores how the timing of deductions are important.
Where accounts are prepared on the accruals basis in accordance with GAAP, the generalrule is that the expenditure is deducted in the accounting period to which it relates.
In many cases this will be the same period as that in which the payment is made.