Income Tax (Trading and Other Income) Act 2005 section 199

First tax year

Section 199 sets out the rules for determining the basis period in the tax year in which a person first starts carrying on a trade.

• The basis period for the first year of trading runs from the date the trade begins to 5th April of that tax year.
• This ensures that only the profits arising from the actual start date of the trade are assessed in that first tax year.
• If the trade both starts and permanently ceases within the same tax year, the normal first-year rule does not apply.
• In that situation, the basis period is instead determined by the final tax year rule in section 202.