Income Tax (Trading and Other Income) Act 2005 section 7

Income charged

Section 7 establishes what amount of trading profits is charged to income tax and how those profits are linked to a particular tax year.

• Income tax is charged on the full amount of a trade's profits for the tax year, determined by reference to the basis period for that year.
• The profits of a tax year include any amounts treated as profits under section 23E(1), which deals with relevant benefits.
• The rules for identifying which basis period applies to a given tax year are set out in Chapter 15 of the Act.
• Special rules for foreign income apply under Part 8, and profits are treated as arising from outside the United Kingdom only if the trade, profession or vocation is carried on wholly outside the United Kingdom.