The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
A claimant’s trading income is defined in the regulations as follows:
SI 2002/2006, reg 6
‘Taxable profits’ has the same meaning as set out in ITTOIA 2005, Part 2 and is therefore net of any capital allowances claim. In the case of both sole traders and partners, the averaging rules are ignored so the profit used for tax credits is the taxable profit for the year before averaging is applied. Averaging for income tax purposes is discussed in the Averaging of trading profit guidance note.
The basis period rules for tax purposes are used to determine the taxable profits for the tax credits claim. For sole traders and partners with established trades, this means that the taxable profits for a tax year are the tax-adjusted profits for the accounting period ending in the tax year (ie the current year basis). See the Basis periods guidance note for a discussion of these rules in more detail.
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login