overlap periods

valentino46

Hi all,

when we talk about basis periods and overlap profits it appears that any profits are assessed twice, so resulting in higher tax paid. Is this correct.

cheers

rob

AK002

Yup.

Your overlap period will be adjusted profits being taxed twice.

You only get the tax back when you cease to trade, it is deducted off your final PT Comp.

valentino46

thanks AK,

that seems a bit harsh, is there any way they can recoup the tax as if they were in business for may years it would not be "reclaimable" for a long time.

rob

AK002

There isn't a way, no.

However the figures are general quite small as a business in it's first yea isn't bound to make a lot of profit and overlap profits will only happen in one or two years.

Also the overlap is of taxable profits so it'll only be 20% of that figure anyway.

Gem7321

I think you can claim overlap relief if you change your accounting date, but I haven't got any experience of it myself

Monsoon

I've never quite sussed it out but, even though some profits are taxed twice, the right year end can actually mean less tax is paid in the first few years, or it delays it enough to make the double taxation worth it.