Business Taxation
Businesses are liable to tax on their profits as determined by the business accounts and specific rules.
A business will be taxed in accordance with its ownership with sole traders and partnerships being liable to Income tax unless one of the partners happens to be a company where its share of profits will be included as part of the company’s income subject to Corporation tax (see section on Company tax). A limited Liability partnership will be treated as any other partnership for tax purposes.
The detailed rules for the determination of taxable profits for a business are governed by Statute law as well as Case law and advice should always be taken in relation to certain transactions to ensure the correct tax treatment. In particular some expenditure may be considered to be of a capital nature where tax relief may only be available through the making of specific claims or elections. The fundamental principles relating to the determination of business profits for tax purposes will be the same for Companies and unincorporated businesses (sole traders, parterships etc.)