Income Tax (Trading and Other Income) Act 2005 section 3

Overview of Part 2

Section 3 provides an overview of Part 2 of the Act, which sets out the main income tax charges on trading income and related amounts.

• Part 2 charges income tax on three categories: profits from a trade, profession or vocation meeting territorial conditions; adjustment income arising from a change of accounting basis; and post-cessation receipts.
• Exemptions from these charges are found in Part 6 of the Act, with particularly relevant exemptions covering VAT repayment supplements (section 777) and incentives to use electronic communications (section 778).
• The charges apply to both UK residents and non-UK residents, but non-UK residents are only charged on their UK-source income.
• Priority rules in sections 2 and 4 determine how this Part interacts with other parts of the tax code and must be considered alongside this overview.