The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The lockdown restrictions imposed in the UK from March 2020 as a result of the coronavirus (COVID-19) pandemic had a significant impact on the trading operations of a huge number of businesses in the UK. Many industries were forced to cease trading completely whilst the usual customer base was required to stay at home. Others were able to alter their usual activities or to donate equipment on a voluntary basis to assist in various ways in the fight against the virus.
Changes to the usual trading activities of a business, as well as the type of income or expenditure generated, can have an impact on the way in which trading profits are calculated for tax purposes. HMRC has issued guidance in thisregard, which is summarised below together with links to other guidance notes for further details. HMRC’s guidance aims to apply existing tax principles to crisis-driven changes in trading activities, rather than to establish any new principles or changes in practice.
Trading profits are calculated for corporation tax and income tax purposes in respect of each separate trade, although it is possible (but unusual) to carry on more than one trade concurrently. See the Adjustment of profits ― overview guidance note for details of these calculations. The commencement of a new trade or the cessation of an existing trade gives rise to a number of tax considerations.
For example, trading losses can only be used against profits arising in the same trade and will be wasted if they remain unutilised at the time the trade permanently ceases. See the Trading losses and anti-avoidance guidance note. It is also important that all income and expenses arising in respect of a trade that has ceased are recognised in the correct period. See the Other adjustments to profits guidance note for details on post-cessation receipts and expenses.
In addition, the date on which a trade starts determines the first period
**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
If an individual sells a chargeable asset and makes an allowable loss, how can this be relieved?First of all, since the simplification of capital gains tax from 6 April 2008, the proforma to calculate a loss is the same as the proforma to calculate a gain. See the Basic calculation principles of
Why capital losses are importantCapital losses are usually set against the capital gains that arise in the same year as the loss, reducing the total taxable gains for that year. Losses not used in this fashion are normally carried forward to be set against the next available gains.However, in
List of supplies that are exempt from VATThe goods or services that are exempt from VAT are listed under various group headings within VATA 1994, Sch 9.It is important to remember that not all supplies that come within a heading will be exempt from VAT. For example, income from the placing of bets
Migration of tax credits to universal creditNew claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants will continue to receive tax credits until they are migrated to the universal credit system. Migration will take