Business Tax - Basis Period

Jayney AAT Student, AATQB Posts: 21 Regular contributor ⭐ ? ⭐
Hi I wonder if anyone can help with a query that I have about basis period. I find the illustrations in Osborne book easy to follow, but come unstuck when I do the questions, so think I don't fully understand the concept.

Can someone please show me how to work out the taxable profits for 1st, 2nd & 3rd year.

The question states that trading started on 1st November 2012 & accounts are made up to the 31st each year.

the profits calculated are:

Period to 31st December 2012 £16,000
Year to 31st December 2013 £108,000
Year to 31st December 2014 £92,000

Need to also know how to work out overlap profits.

Answer is first year £43,000, 2nd year £108,000 & 3rd year £92,000 & overlap profit £27,000

If someone can explain the process, I would be very grateful.

Many thanks



  • ncraggs
    ncraggs Registered, Tutor Posts: 70 New contributor ?
    In the first year you would tax from the start of the business to the following 5th of April. So this will be the period up to 31/12/12 £16,000 plus 3 months of the period to 31/12/13, which is £108,000 x 3/12 = £27,000. So this plus the £16,000 is £43,000.

    You are then on current year basis, where you have a 12 month period ending in each accounting year. Note you have overlap profits of £27,000.
    AAT Distance Learning Director First Intuition
  • Jayney
    Jayney AAT Student, AATQB Posts: 21 Regular contributor ⭐ ? ⭐
    many thanks for explaining this - find it rather confusing.
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