Trading income Flashcards
How do you calculate the tax adjusted trading profits on cessation of trade?
Tax all profits not yet assessed X
Less overlap profits (X)
What should the basis period be in the first year of trading?
From commencement to the following 5 April
How should the second year basis period be treated if the POA is 12 months and it ends in the second tax year?
Tax that 12 months as CYB
How should the second year basis period be treated if the POA is less than 12 months and it ends in the second tax year?
Tax first 12 months of trading
How should the second year basis period be treated if the POA is more than 12 months and it ends in the second tax year?
Tax last 12 months of POA ending
What if there is not a POA ending in the second tax year?
Tax the tax year 5 April - 6 April
How do you treat a change of accounting date resulting in a short POA?
Tax the last 12 months to the new date
How do you treat a change of accounting date resulting in a long POA?
- Tax from end of last basis period to new accounting date
- results in taxing more than 12 months
- reduce overlap profits to relieve this
How do you treat a change of accounting date resulting in no POA ending in the tax year?
Create POA ending 12 months before new accounting date
How do you treat a change of accounting date resulting two POAs ending in a tax year?
Tax from end of previous basis period to new accounting date
Disposals from capital allowances, what value do you take away?
The lower of proceeds or cost
What is the small pool allowance limit?
1000, make sure you pro rate
How do you treat drawings of stock from the business?
As if they were sold to a customer - selling price
Do you apportion FYA for business use?
Yes
How do you treat the purchase of a lease for capital allowances?
- calculate the income portion of the premium (51-n)/50 x premium
- treat it as extra rent - therefore pro-rate
