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PART 2U.K. Income for the purposes of tax credits

CHAPTER 4U.K. Trading Income

[F1 Trading incomeU.K.

6.—(1) The claimant’s trading income is—

(a)the amount of the claimant’s taxable profits for the tax year from—

(i)any trade carried on in the United Kingdom or elsewhere; and

(ii)any profession or vocation the income from which does not fall under any other provisions of these Regulations; and

(b)any grant or any sum paid to the claimant under a coronavirus support scheme, except any payment made under the Coronavirus Job Retention Scheme in respect of an employee,

except where the claimant is a partner in the trade, profession or vocation in which case paragraph (2) applies.

(2) Where the claimant is a partner in a trade, profession or vocation, the claimant’s trading income is—

(a)the taxable profits for the tax year arising from the claimant’s share of the partnership’s trading or professional income; and

(b)any grant or any sum paid to the claimant under a coronavirus support scheme, except any payment made under the Coronavirus Job Retention Scheme in respect of an employee.

(3) In this regulation—

(a)“taxable profits” has the same meaning as it has in Part 2 of ITTOIA but disregarding the relevant benefit amount in section 23E (tax treatment of relevant benefits) and Chapter 16 of that Part (averaging profits of farmers and creative artists); and

(b)“Coronavirus Job Retention Scheme” means the scheme of that name established under the direction given by the Chancellor of the Exchequer under section 76 of the Coronavirus Act 2020 on 15th April 2020 (as that Scheme has effect from time to time).]

Textual Amendments

[F2Trading Income: in-year finalisationU.K.

6A.  This regulation applies where—

(a)an award of universal credit is made to a person who was previously entitled to a tax credit;

(b)the award of that tax credit has terminated;

(c)the date on which the award terminated falls in the tax year to which that award relates (“the relevant tax year”); and

(d)the claimant carried on a trade, vocation or profession during the part tax year.

Textual Amendments

6B.—(1) Where regulation 6A applies, a claimant’s trading income for the purposes of the first paragraph in Step 4 in regulation 3(1) is the claimant’s actual or estimated taxable profits attributable to the part tax year (“the relevant trading income”).

(2) The relevant trading income is to be calculated by reference to the basis period ending during the relevant tax year.

(3) The basis period is to be determined by reference to the rules in Chapter 15 of Part 2 of ITTOIA.

(4) The relevant trading income is calculated by—

(a)taking the figure for the actual or estimated taxable income earned in the basis period;

(b)dividing that figure by the number of days in the basis period to give the daily figure; and

(c)multiplying the daily figure by the number of days in the part tax year on which the trade, profession or vocation was carried on.]

Textual Amendments