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Chap 7 - Trading Profits - Basis of Assessment
Chap 7 - Trading Profits - Basis of Assessment
Chap 7 - Trading Profits - Basis of Assessment
CYB: Basis period for the tax year is the 12-month POA ending in that tax year.
VD:
POA Taxable TP
2/ OPENING YEARS:
2.1. First tax year:
Actual basis: date of commence ➞ 5/4
2.2. Second tax year:
> 12m 12m to the end of the POA ending in 2nd tax year
≠ 12m 12m to the end of the POA ending in 3rd tax year
3/ OVERLAP PROFITS:
Overlap profits: Opening year rules ➞ choose POA not ending on 5/4 ➞ some taxable TP
were taxed twice (overlap profits)
VD1: Maureen starts trading on 1/6/20 & decides to make up accounts to 31/7. Taxable TP:
14 months to 31/7/21 ➞ £20,160
• Overlap profit:
• Overlap profit:
4/ CLOSING YEARS:
4.1. Final tax year:
Basis period (Final tax year): End of basis period for penultimate tax year ➞ Date of
cessation
4.2. Penultimate tax year:
No such POA (final POA > 12m) 12m to the normal year end date falling in the tax year
VD: Kevin ceased trading on 30/9/21. He has unrelieved overlap profits of £2,000. Tax-
adjusted TP:
Note: Nếu đề cho ceased trading date & hỏi Taxable TP của final tax year:
- Đề cho sẵn unrelieved overlap profit b/f ➞ deduct
- Đề ko nhắc j đến overlap profit ➞ tự giác tính overlap profit để trừ đi
VD1: Darren ceased trading on 30/11/21. He has unrelieved overlap profits of £2,000. Tax-
adjusted TP:
Year ended 31/12/19 £14,000
Year ended 31/12/20 £10,000
Period ended 30/11/21 £8,000
VD2: John started trading on 1/1/20, but his business quickly ran into cash flow problems &
he ceased to trade on 28/2/22. Taxable TP:
year ended 31/12/20 £6,000
1/1/21 - 28/2/22 £2,800
Taxable TP for 21/22?
➞ đề hỏi final tax year & ko cho overlap profit ➞ tự tính
• Overlap profit:
➞ Overlap period: 1/1/20 - 5/4/20
5/ PARTNERSHIPS:
● Taxable trading profits của partnership được phân bổ cho các partners ➞ income tax
● Opening & closing year rules áp dụng cho partners join & leave partnership. Các
continuing partners còn lại vẫn tiếp tục áp dụng CYB.
● Tính taxable TP for tax year như sole trader ➞ phân bổ cho từng partners
● Nếu có sự thay đổi trong cách share profit ➞ chia POA thành 2 kỳ với 2 cách share
profit cho partners ≠ nhau ➞ time apportion salary & interest on capital
VD: Calder, Scott and Tim have been in partnership for several years. Taxable TP =
£136,000 for the year ended 31/5/21.
Until 30/9/20, partnership had shared profits equally. From 1/10/20, profit - sharing
agreement was amended as follows:
1/10/20 - 31/5/21