Badges of Trade
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Table of content
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1. Introduction
2. Definition of “Badges of trade”
3. Analysis of Harjit’s hobby
4. Calculations of income tax and national insurance payable
5. Conclusions
Appendix
Bibliography
1. Introduction
The aim of this report is to analysis the transactions that engaged by Harjit on his hobby the selling and buying activities of his rock memorabilia collection whether it would be assessed to income tax or not according to the UK tax system. If his hobby constitutes a trade, the income he earned from the transactions will be taxed per the Income tax (Trading and Other Income) Act 2005 assuming that he is a UK resident and, his income from employment is taxed per the rules in the Income Tax (Earnings and Pensions) Act 2003. (Melville, 2011)
Before examining Harjit’s case, it is necessary to understand the meaning of “badges of trade”. This is also one of the requirements in this assignment, which to discuss the “badges of trade” in detail. Therefore, an elaborate study for the concept of “badges of trade” was included in the main body of the report.
Assuming that Harjit’s hobby was assessed to be trade in nature and subject to income tax by the Income tax (Trading and Other Income) Act 2005, a calculation of his income tax and national insurance payable was prepared consisting of the corresponding trading income.
All concepts and definition listed in the report are using the secondary research method. (Saunders, Lewis and Thornhill, 2009)
2. Definition of “Badges of Trade”
“A self-employed person may be conducting a trade or may be exercising a profession or vocation.” (Melville, 2011, P.115) Those profits are all charged to income tax by the Income tax (Trading and Other Income) Act 2005. (Melville, 2011) ‘Trade’ concerns its trade nature on its own facts for each case. (HMRC BIM20201,
Table of content
-------------------------------------------------
1. Introduction
2. Definition of “Badges of trade”
3. Analysis of Harjit’s hobby
4. Calculations of income tax and national insurance payable
5. Conclusions
Appendix
Bibliography
1. Introduction
The aim of this report is to analysis the transactions that engaged by Harjit on his hobby the selling and buying activities of his rock memorabilia collection whether it would be assessed to income tax or not according to the UK tax system. If his hobby constitutes a trade, the income he earned from the transactions will be taxed per the Income tax (Trading and Other Income) Act 2005 assuming that he is a UK resident and, his income from employment is taxed per the rules in the Income Tax (Earnings and Pensions) Act 2003. (Melville, 2011)
Before examining Harjit’s case, it is necessary to understand the meaning of “badges of trade”. This is also one of the requirements in this assignment, which to discuss the “badges of trade” in detail. Therefore, an elaborate study for the concept of “badges of trade” was included in the main body of the report.
Assuming that Harjit’s hobby was assessed to be trade in nature and subject to income tax by the Income tax (Trading and Other Income) Act 2005, a calculation of his income tax and national insurance payable was prepared consisting of the corresponding trading income.
All concepts and definition listed in the report are using the secondary research method. (Saunders, Lewis and Thornhill, 2009)
2. Definition of “Badges of Trade”
“A self-employed person may be conducting a trade or may be exercising a profession or vocation.” (Melville, 2011, P.115) Those profits are all charged to income tax by the Income tax (Trading and Other Income) Act 2005. (Melville, 2011) ‘Trade’ concerns its trade nature on its own facts for each case. (HMRC BIM20201,
Bibliography: Combs, A., Dixon, S. and Rowes, P. (2010) Taxation – incorporating the 2010 Finance Acts, 29th ed. London: Fiscal Publications. Melville, A. (2011) Taxation-Finance Act 2010, 16th ed. London: Pearson Education. Melville, A. (2011) Taxation-Finance Act 2010, 16th ed. London: Pearson Education, pp.104, 115, 118 & 225. Saunders, M., Lewis, P. and Thornhill, A. (2009), Research methods for Business Students, 5th ed