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I am so confused on trading income and employment income. is it like employment income is made by each employee for themselves and trading profit is made by employer or what? In business like partnership and companies there are many owners ,directors. so,what do they prepare trading profit or employment income or anything else.
I think you might be thinking along the right lines.If a company is involved it has a separate legal personality to its owners and potential worker owners.So it may be useful for lets say a very small incorporated entity made up of one owner of one pound share who is also only worker to employ themselves and pay themselves a small salary in order to generate earnings with which they could contribute to a pension.This would still be a relevant expense for the company concerned and reduce profit.With partnerships, the partnership itself must submit a tax return to HMRC giving details of profit or loss for period of account ending in the tax year and also details of profit sharing agreement that existed in that period of time.Partners can also be paid a wage or salary and this will be deducted from trade profits.
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