BTX Shares & Opening Year

Clarekaye

I am struggling with a few things on BTX, shares & indexing and the second year of a new business dates & overlap profits.
I thought the index was when a transaction had a value but is it more on when the transaction happened?

Second year on trading I am just stuck on full stop I think I have it but then cannot work out the overlap profits.
Anyone got any tips?

Clintm15

If you can give a little more detail as to what you don't understand I'd be glad to help.

Clarekaye

This one is off the AAT Practice...
Started trading 1st Jan 13
Made accounts up to 28 Feb 14
Taxable profit for period 28 Feb 14 was 105560
State the basis period & overlap profits (its only one start date, one end date & a figure for overlap profits)

Can you help

Clarekaye

And an example of a shares one I am stuck on....2010 qualification 2013 practice 2.3, Where has the index for Dec 2013 0.461 come from there are no transactions in that range?

Clintm15

The 1st period should be 1st Jan 13 - 5th April 13 and the second period should be 28th Feb 13 - 28th Feb 14. This means that the overlap period is 28th Feb 13 -5th April which rounded up to the nearest month is a 1 month overlap period.

So the overlap period is 1 month and the profit period is 14 months. Therefore the overlap profits are 1/14 * £105,560 = £7,540.

I hope this helps Clare

Clintm15

Unfortunately the practice papers don't work on my laptop. (don't ask me why I have no idea) If you copy the question about the shares I'll happily help clear things up for you.

Clarekaye

This website makes me so mad I cannot paste or upload in any format.

How do you work out the dates so easily,

The 1st year is 2012/2013 tax year, which means the second accounting period does fall in the second tax year?

Clintm15

The first tax year is simple because it's always from start of business to the nearest 5th April.

The second tax year is a little more tricky. Since in the example you gave the company made accounts up to 28th Feb 2014, the ideal start date for the second tax year is 28th Feb 2013. The 28th Feb 2013 is after the start date of 1st Jan 2013 so we can use that period for the second tax year. If the company had made accounts to May 2013 we would not be able to use the period May 2012 - May 2013 because May 2012 falls before the start date of Jan 2013 and so we would use the first 12 months of trading. If the company had made accounts to say June 2014, the ideal period of June 2013 - June 2014 would leave a gap between the end of first tax year (April 2013) and the ideal start date of June 2013. So in this scenario we would use April 2013 - April 2014 for the second tax year.