BIM81095 - Computation of liability: overlap relief - given on cessation
S205 Income Tax (Trading and Other Income) Act 2005
Any overlap relief not used on a change of accounting date (see BIM81090) is given in full in the tax year in which the business ceases.
Example
»Ê¹ÚÌåÓýapp business in the example at BIM81090 ceases on 31 May 2020. »Ê¹ÚÌåÓýapp overlap profit available for relief is £25,002.
»Ê¹ÚÌåÓýapp basis periods for the final 2 years are:
Year |
- |
- |
|---|---|---|
2019-2020 |
Year 10 |
12 months to 31 October 2019 |
2020-2021 |
Final year |
7 months from 1 November 2019 to 31 May 2020 |
»Ê¹ÚÌåÓýapp profits for the 7 months to 31 May 2020 are £80,000. Overlap relief for the remaining overlap profits (£25,002) is deducted to give taxable profits for 2020-2021 of £54,998.
»Ê¹ÚÌåÓýapp total profits taxed over the life of this business will exactly equal the total profits made.