Corporation Tax vs Business income tax

kuliann

Hi

Please excuse me for what is probably an extremely silly question, but ........

What is the difference between corporation tax and business income tax?

I thought incorporated businesses pay corporation tax (CT600) and in an unincorporated business the owner/partners would be taxed using Self Assessment, and thus be classed as personal income tax.

I would appreciate any help with this. I'm sure it's just a mental block!

Thank you

Monsoon

It's just semantics, and you're right.

Companies pay CT, individuals pay IT.

"Business" income tax is just those aspects of income tax as they relate to business income (i.e. self employment), as opposed to personal income like savings, pensions, employment etc. It's all income tax.

The rules for CT and IT in relation to business are broadly the same in various respects, but there are notable differences, so it's important to make the distinction.

kuliann

Thank you Monsoon.

Londina

for those who are unincorporated businesses, is it compulsory to prepare a balance sheet or the P&L is enough for tax computations? It confuses me as some individuals only require a basic P&L but others (example hairdressers, plumbers, dentist) have also a BS.

Thanks!