Income from self employment

[Annie]

Year of assessment (tax year) runs from 6th April to the following 5th April
Profits charged to tax year are earned during the basis period for that year
Basis period is also know as current year basis (CYB)

Badges of trade = are the main principles / criterion used to distinguish trading and non-trading activities
Subject matter / intention of transaction
Length of period of ownership held
Frequency of transaction
Supplementary work and marketing
Taxpayers work and marketing
Taxpayer’s intention behind sale
Profit motive

Expenses incurred wholly and exclusively for trade purpose is always deductible
AND
Expenditure which is not incurred for the benefit of trade is not deductible

Net Trading Profits xx
ADD
1) Expenditure shown in the accounts BUT not included in the accounts xx
2) Trading income taxable BUT not included in the accounts xx

LESS
1) Expenses deductible for tax purpose BUT not shown in the accounts xx
2) Income not taxable but included in the accounts xx

TRADING PROFITS FOR TAX PURPOSE xxx

Pre-trading expenses are expenses incurred before business start trading