Income Tax (Trading and Other Income) Act 2005 section 816

Alternative calculation of profits: trading income

Section 816 sets out how to calculate the taxable profits of a trade where the individual's qualifying care receipts exceed their tax-free limit.

• This section applies where the individual's qualifying care receipts for the tax year are treated as income from a trade
• Taxable trading profit is calculated as total qualifying care receipts for the year minus the individual's qualifying care relief limit
• No deduction is made for actual expenses — the individual's limit replaces the normal expense deductions
• If qualifying care receipts do not exceed the individual's limit, no taxable profit arises under this calculation