BIM81001 - Computation of liability: introduction to basis periods
S197-S202 Income (Trading and Other Income) Act 2005 (ITTOIA 2005)
An individual who carries on a trade, profession or vocation is taxed on the profits arising in the 바카라 사이트˜basis period바카라 사이트™ for the tax year.
The general rule is that the basis period for a tax year is the period of 12 months ending with the trader바카라 사이트™s accounting date in that year. The accounting date is the date in the tax year to which accounts are drawn up.
Different rules apply in the early years after the trade commenced, to the year of cessation, and for tax years in which there has been a change of accounting date. However, the basis period for a tax year always ends in that year.
Hence these rules are known as the 바카라 사이트˜current year바카라 사이트™ basis period rules. They have applied:
- since 1997-1998 if the trade commenced before 6 April 1994
- since 1994-1995 if the trade commenced on or after 6 April 1994
Different rules applied before the introduction of self assessment for Income Tax, in which the basis period for a tax year usually ended in the year before. These rules are known as the 바카라 사이트˜previous year바카라 사이트™ basis period rules.
For the 2024-25 tax year onwards basis period rules will not apply, and an individual will instead be taxed on the profits arising in the tax year. The transitional rules will apply for the 2023-24 tax year.
Structure of this guidance
This guidance is divided into five main parts:
- The normal rules for determining basis periods (S198-S202 ITTOIA 2005), see BIM81010.
- Special rules where there is a change of accounting date (S214-S219 ITTOIA 2005), see BIM81035.
- Apportioning profits and losses to basis periods (S203-S206 ITTOIA 2005), see BIM81065.
- Giving 바카라 사이트˜overlap relief바카라 사이트™ for overlap profits (S205-S220 ITTOIA 2005), see BIM81075.
- The 바카라 사이트˜previous year바카라 사이트™ rules and the transition to the 바카라 사이트˜current year바카라 사이트™ basis. See BIM81100.
- The tax year basis rules and transitional rules (Sch 1 FA 2022). See BIM81201.