The profits of a trade, profession or vocation are charged to income tax. This charge is imposed by the Income Tax (Trading and Other Income) Act 2005 (‘ITTOIA 2005’), and specifically by s. 5 of that Act. The person liable to tax on trading income is the person who receives or is entitled to the profits (s. 8).
The legislation underpinning the tax charge was changed fundamentally from 6 April 2005 though that change did not in itself affect the calculation of taxable profits or, indeed, the amount of tax payable in any particular circumstances. The primary effects of the amended legislation were:
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