Income Tax (Trading and Other Income) Act 2005 section 783AK

Deductible amount: splitting of trading allowance

Section 783AK deals with how individuals who have more than one source of trading income and/or miscellaneous income can split their trading allowance between those different sources when claiming partial relief.

• Where an individual has income from more than one trade, or from a trade and miscellaneous income, the single trading allowance (£1,000) must be shared across those sources
• The individual can choose how to allocate the trading allowance between the different income sources
• The amount allocated to any particular trade cannot exceed the receipts of that trade — it must not create a loss on the trade
• Similarly, the amount allocated against miscellaneous income must not result in a loss on the transactions giving rise to that income