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HMRC internal manual

Business Income Manual

Trade profits: statute - main charging provisions

SS5-7 Income (Trading and Other Income) Act 2005 (ITTOIA 2005); S35 Corporation Tax Act 2009 (CTA 2009)

For Income Tax the general charging provisions are in SS5-7 ITTOIA 2005.

S5 ITTOIA 2005 establishes that Income Tax is charged on the profits of a trade, profession or vocation.

S6 ITTOIA 2005 sets out the territorial scope of the charge to tax on trade profits. Details of the section are at BIM15010.

S7(1) ITTOIA 2005 provides that tax is charged ‘on the full amount of the profits for the tax year’. See BIM15040 for further guidance on the meaning of this expression. Section 7(2) adds that ‘the profits of a tax year are the profits of the basis period for the tax year’. For the rules identifying the basis period for a tax year see BIM81010 onwards.

For Corporation Tax the general charging provisions is S35 CTA 2009 which establishes that Corporation Tax on income applies to the profits of a trade. For the territorial scope of the charge see BIM15010.