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
imgtext

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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