overlap periods

valentino46 Registered Posts: 124 🎆 🐘 🎆
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.




  • AK002
    AK002 Registered Posts: 2,492

    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
    valentino46 Registered Posts: 124 🎆 🐘 🎆
    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.

  • AK002
    AK002 Registered Posts: 2,492
    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
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    I think you can claim overlap relief if you change your accounting date, but I haven't got any experience of it myself
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    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.
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