INTM610280 - Making Adjustment on the Tax Return: Individuals

Customers will be required to determine whether the Profit Fragmentation legislation applies to them. If they determine that the Profit Fragmentation legislation does apply to them, they will need to make the adjustments required by paragraph 7 of the legislation. These pages set out how different types of customers to whom the Profit Fragmentation legislation could apply should make the required adjustments on their tax return. Customers to whom the Profit Fragmentation legislation applies, and who currently do not make a self-assessment return, must make a self-assessment return in order to report taxable income arising from the adjustment made under the Profit Fragmentation legislation.

Individuals operating as sole traders/ receiving UK property income required to make adjustments under the Profit Fragmentation legislation

Individuals who are self-employed (completing SA103F or SA103S)

Individuals required to adjust their self-employment income under paragraph 7 of the Profit Fragmentation legislation must record these adjustments on their SA return as follows.

Individuals who complete form SA103F must:

  • If the required adjustment consists of reducing an expense, disallow the relevant expense that was previously included in the return by making the appropriate entry in one of boxes 32-45.
  • If the required adjustment consists of increasing their income, increase their income by inserting the additional income figure in box 60.

Individuals who complete form SA103S must:

  • If the required adjustment consists of reducing an expense, take the relevant expense off the expense figure included in one of boxes 11-19 (and the total at box 20). If their annual turnover was such that they are only required to complete box 20, they should just take the relevant expense off the box 20 total figure.
  • If the required adjustment consist of increasing their income, increase their income by inserting the additional income figure at box 27.

Individuals who have UK property income (completing SA105)

Individuals required to adjust their UK property income under paragraph 7 of the Profit Fragmentation legislation must record these adjustments on their SA return (form SA105) as follows:

  • If the required adjustment consists of reducing an expense, take the relevant expense off the expense figure/s included in boxes 24-29.
  • If the required adjustment consists of increasing their income, increase their income by increasing the total income figure at box 20.