9. Sole-trader income

Question 1

What are the opening year rules?

Answer 1

First tax year:
- date of commencing trade - 05th April

Second tax year:

a) no period of account end: 06th April to 05th April
b) POA less than 12 months: first 12 months of trade
c) POA is 12 months: that period of account
c) POA more than 12 months: `12 months to the accounting date ending in the tax year

Third tax year:
12 months to the accounting end date in the tax year

Fourth year and onwards:
Normal current year basis

Question 2

What are overlap profits and how are they treated?

Answer 2

Overlap profits are assessed in more than one tax year. Totalled and deducted in year business ceases to trade.

Question 3

What are the ongoing rules?

Answer 3

Profits for tax year determined on trading profits closing in that year.

I.e. profits for 30th June 18 for TY 18/19 as between 06th April 18 - 05th April 19

Question 4

What are the closing year rules?

Answer 4

For the penultimate year, assess as normal

Add final year and additional period together and take off overlapped profits accumulated in trading