Trading profits and losses and tax credits

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance

Trading profits and losses and tax credits

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
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This guidance note looks at the how trading profits and losses are calculated for tax credit awards. Note that tax credits ceased on 5 April 2025. New claims for tax credits are not possible. Existing claimants have migrated to the universal credit system. See HMRC guidance ‘Tax credits ended on 5 April 2025’ and the Universal credit guidance note. There is information about migration notice letters on GOV.UK.

Determining the profit or loss for tax credits

A claimant’s trading income is defined in the regulations as follows:

  1. •

    the amount of his taxable profits for the tax year from:

    1. ◦

      any trade carried on in the UK or elsewhere, and

    2. ◦

      any profession or vocation the income from which does not fall under any other provisions of the tax credits regulations

  2. •

    if the claimant is a partner in the trade, profession or vocation, his taxable profit for the year arising from his share of the partnership’s trading or professional income

SI 2002/2006, reg 6

‘Taxable profits’ has

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  • 27 Oct 2025 14:40

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