How to calculate net gain from tax deduction

[Deleted User]

Hi! I'm a higher rate taxpayer, and have some tax deductible expenses. Not sure how to calculate net gain from tax deduction though -

Let's say I have something that costs £100 that is tax deductible. This means that I don't pay tax on that amount. Is it correct to say that that will mean a nett gain of £40 because 40% would otherwise have been taxed? Or would you take the average of what you're taxed?

I'm confused...

Dal_Whinnie

Are you an employee or self employed? If self employed then you are basically taxed on your profit (income less allowable expenses) so if you pay £100 out on an allowable expense then your profit will be reduced by £100 so you will pay £40 less tax but your net profit will be £60 less than it would have been if you had not incurred the expense. If you pay out £100 on a non allowable expense (e.g. entertaining) then your profit and tax liability are unchanged so your net profit will be £100 less.

If you are an employee and you have had to pay out £100 on expenses then the same really applies. If it is deductible then your net pay will effectively be reduced by £60. If it is not deductible then your net pay will be reduced by £100

Are you still confused?