L5 - SIMPLE Flashcards
What are the 3 main income tax Acts?
ITEPA 2003, ITTOIA 2005, ITA 2007.
What is the UK tax year?
From 6 April to 5 April the following year.
From 2024, what must businesses do when reporting income?
Report income for the exact tax year period.
What is income tax charged on for self-employed people?
Profits from a trade, profession, or vocation.
What is a “trade”?
Selling goods or services as your own business.
Can a one-off sale be a trade?
Yes, if the goal was to make a profit.
What is a “profession”?
A self-employed job using intellectual or skilled services (e.g. journalist).
What is a “vocation”?
A self-employed job not quite a profession or trade (e.g. artist or actor).
Are the tax rules different for trades, professions, and vocations?
No – the rules are mostly the same.
What does “income” mean in tax law?
Money or anything that can be turned into money.
Are gifts and windfalls taxable income?
No – they’re not usually taxed.
Is a prize always taxable?
No – only if it’s part of your job or business.
Give an example of exempt income.
Maintenance payments, personal injury payments, scholarships, redundancy pay (first £30,000).
