In almost all countries, income tax is paid by people who have an income. Often there is a lower limit to the amount of annual earning that needs to be taxed. Not all income is taxed and there is some expenditure that is tax deductible.
Tax is usually levied on the total profit earned through work, including self employment or a job. However, the profit is calculated after deducting certain expenditures. This amount is the personal allowance that everyone is entitled to without paying tax on it. However, money spent on tools or services that could benefit or further the business are also tax exempt.
For example, if you are a self employed architect, and earn a certain amount of money. The amount you may spend on things like purchasing new up to date software, perhaps a new computer or an additional car for your business. Used car sales and second hand cars dealers are a good place to search for a bargain, and it is also good to know that the expense will be tax deductible.
As long as it is for your business and not purely for personal use, it is exempt. Some types of earnings are exempt from paying tax to begin with. The proportion of tax you pay depends on the level of earning. Along with income tax, national insurance contributions also have to be made by all earning members of society.