Jurisdiction(s):
United Kingdom

Key definition

Profits definition

What does Profits mean? Profits describes the net surplus generated by a business or asset after deducting relevant costs, used to assess performance, tax liabilities, distributions and damages. The precise meaning is context‑specific. For corporation tax in the UK and Ireland, legislation provides that a company’s profits include both income and chargeable gains (capital gains), not just trading results. Key distinctions include: - Accounting profit: measured under applicable GAAP. - Taxable profits: accounting profit adjusted by statute (for example, disallowables, capital allowances, losses and group relief). - Distributable profits: profits available for lawful dividends under companies legislation (UK Companies Act 2006, Irish Companies Act 2014), broadly the company’s...

UK tax factors in selecting a business vehicle: sole traders, partnerships (including LLPs) and companies—profit extraction, losses, administration and exit planning

Published by a LexisNexis Tax expert

Practice notes

Practice Note: Forms of business vehicle—tax summary

When one or more individuals decide to set up a business, they must choose the vehicle through which the business will be run. In addition to the commercial and legal reasons informing that decision (see Practice Note: Forms of business vehicle), the tax treatment applicable to each distinct vehicle will often be the determining factor in deciding whether it is suitable for carrying on a particular business. A summary of the tax consequences of operating as:

a sole trader
a general partnership
a limited partnership
a Limited Liability partnership
a company

is addressed in Practice Note: Forms of business vehicle—tax summary and the Choice of business vehicle—tax comparison table. This Practice Note brings together some of the principal tax considerations that shape the decision of a person, or a group of people, when weighing the choice of business vehicle, highlighting how differing tax treatments can influence the appropriateness of each option for a particular enterprise...

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Web page updated on 22/05/2026

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