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A company is subject to corporation tax on the profits of its trade or trades in accordance with the rules found in sections 34–201, Part 3 of the Corporation Tax Act 2009. It is therefore important for any company to work out whether or not it is conducting a trade and which elements of its business activities form part of that trade. A company may carry on more than one trade, the profits or losses of each of which must be calculated separately. If some or all of the activities of the company do not constitute a trade, those activities may be taxed under other provisions, such as corporation tax on capital gains, to which different rules apply.

An individual is subject to income tax on the profits of their trade, profession or vocation in accordance with the rules found in Part 2 of the Income Tax (Trading and Other Income) Act 2005. For more on the income tax treatment of trading profits, including the meanings of profession and vocation, see Practice Note: Types of income