Tax due on ceasation of business...

edkav

I have done some reasearch but can't seem to find the answers I am looking for.

A sole traders basis periods are April 2006 t0 April 2007 and he ceases trading in December 2007. No overlap relief. He has not filed his return yet - does he file for the 20 months to December 2007 or file a seperate return for April-December 2007 in the 2008 return?!!

Actually, now i have written this down, it seems obvious (ish!) that it cant be filed in the 2007 can it!!!

Please advise...:001_unsure:

Poodle

edkav

If a business ceases trading in it's second tax year, the basis period for that year runs from the 6th April at the start of the year up to the date of cessation. This rule overrides the usual commencement rules for the second tax year.

So,

for the 2007 tax year, basis period is April 2006 -5th April 2007

for the 2008 tax year, basis period is 5th April 2007 - cessation in December.

Poodle

edkav

Thank you Poodle! :001_smile: