Trading basis motherfucker

Question 1

What does S64 allow relief for?

Answer 1

Allows for losses to be reclaimed against profits of current year or previous years. AND BOTH!

Question 2

What does S83 allow relief for?

Answer 2

Carry Forward against future profits

Question 3

What Does S72 allow relief for?

Answer 3

Any trading losses that have occurred within the 4 years of the creation of the business and set against the 3 previous tax years

Question 4

What does S89 allow for?

Answer 4

This looks at the terminal trade losses upon the cessation of a business (last 12 months of operation) It can only be relieved from current tax year and preceding tax years

Question 5

What are some consideration that you need to think of when relieving losses

Answer 5

If you are carrying losses forwards and in the current year depending the level of income that you have you might not get the full benefit of personal allowances as you have to fully claim the maximum amount of profits possible

Question 6

How is profit calculated upon the cessation of a business

Answer 6

whenever the cessation period is for the business, that tax year that it falls into will be the basis period for the profits

Question 7

How will the trading basis reform affect traders

Answer 7

The change will be in effect from the 2024/25 and will mean that business will no longer be able to select their own trading period and their trading profits will now be in line with the tax years irrespective of their accounting dates. Business will need to plan for this as some business may accidentally end up having to report two sets of profits in the same year instead of different years if the tax basis reforms go against them