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Division B1.4ÌýÌýÌýÌý Identifying a trade

For updates affecting this Division please see Part B0 Updates

What is a trade, profession or vocation?

B1.401 Definition of a trade—overview

Income tax is charged on the profits of a trade, profession or vocation¹. Corporation tax is charged on the profits of a trade². It follows that it is necessary to recognise what constitutes a trade, profession or vocation.

However, before deciding on whether an activity or set of activities constitutes a trade or a profession or a vocation, it is first necessary to ask whether a charge under the rules relating to income from property (for both income tax and corporation tax purposes) employment income, pension income or social security income (for income tax purposes), or to income from holding an office (for corporation tax purposes) arises. This follows from the priority rules in ITTOIA 2005, s 4 and CTA 2009, s 201 (see B2.101).

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