Basis Of Assessment Flashcards
Basis period: Ongoing business
Taxed on accounting period
Ending in the tax year
Basis period: Commencement of trade
Opening year rules
Basis period: Cessation of trade
Closing year rules
Current year basis (CYB)
Profits taxed in tax year =
Profits of the:
12m accounting period
Ending in:
That tax year
Opening year rules: First tax year
Year in which trade starts
Opening year rules: First year tax: Basis of assessment
Actual basis
Basis for assessment: Actual basis
Tax adjusted profits
Apportioned from the date
The business starts trading
To the end of the tax year
For the exam: Apportioned to NEAREST MONTH
Basis for assessment: Second year onwards: Question
Is there a POA ending in the second tax year?
POA
Period of account
Basis period: Second year onwards: POA ending in 2nd tax year: POA exactly 12m
Tax THAT POA:
CYB
Basis period: Second year onwards: POA ending in 2nd tax year: POA less than 12m
Tax FIRST 12m
Of trading
(I.e. from date of commencement)
Basis period: Second year onwards: POA ending in 2nd tax year: POA more than 12m
Tax LAST 12m
Of long POA
Basis period: Second year onwards: No POA ending in 2nd tax year
Tax ACTUAL TAX YEAR (actual basis)
(I.e. 6 Apr - 5 Apr)
In the third year:
Apply rules for:
POA longer than 12m ending in the tax year
Basis of assessment: Golden rule
HMRC will tax
TWELVE MONTHS
Of profits
Basis period: POA ending in second tax year exactly 12m: Some profits taxed twice
Overlap profits
