Taxation For Soletraders & Partnerships Notes

Updated Taxation For Soletraders & Partnerships Notes

Accounts

Approximately 35 pages

A collection of the best LPC Business Accounts and LPC Solicitor's Accounts notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through twenty-nine LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".
In short these are what we believe to be the strongest set of LPC Accounts notes available in the UK this year. This coll...

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Business Accounts

1. Taxation: Sole traders

Income Tax / Capital Gains

Tax year calendar: 6^th April 2010 – 5^th April 2011 = Tax year 10/11

Often businesses choose accounting period on Calendar basis: 1^st January – 31^st December

Current year rule	Wherever the ‘accounting period’ end date is [i.e. 31^st December 2011], profit generated in the previous 12 months are subject to tax year in which the end date falls. Accounting period 1^st Jan 11 31^st Dec 11 (10,000) ---I------------------I----------------------------------I-----------------I---------------- 6 April 11 5^th April 12 Tax Year 11/12 Dec 31^st: profits = 10,000 = Tax year 11/12 = 10,000 (December 31^st 11 ends in Tax year 11/12)
Opening year rule	FIRST YEAR Profits are taxed from the date of commencement to the next 5^th April Tax Year which commencement date falls within 1^st Jan 11 31^st Dec 11 (10,000) ---I----------------------------------I-----------------------I 5 April 11 Commencement date = 1^st January 2011 Tax year 10/11 1^st Jan – 31^st Dec = 10,000 profit 10,000 /12 = 833 profit each month 833 X 3 = 2,500 profit for January / Feb / March (3 months) Tax 10/11 = 2500. SECOND YEAR RULE: Either: Profits of first 12 months are taxed [therefore overlap relief]; or Where a full accounting period can be allocated to the second tax year, the profits from that accounting period. Accounting period 1^st Jan 11 31^st Dec 11 (10,000) ---I------------------I----------------------------------I-----------------I---------------- 6 April 11 5^th April 12 Tax Year 11/12 Tax year 11/12 – profits of first 12 months are taxed (so profit from 1^st January 11 – 5^th April 11 are taxed for a second time) Overlap profit = 2,500 (available when business ends)
Closing year rule	Notional accounting period running from the day AFTER the end of the last accounting period [i.e. 1^st Jan] to be assessed up to the date of cessation [30^th June]. Overlap relief is deducted from final accounting period Accounting period 1^st Jan 11 30^th June - bus closes (36,000) ---I------------------I-----------------+-----------------------------I-----------------I------- 6 April 11 5^th April 12 Tax Year 11/12 Business closes on 30^th June 2011. Makes 36,000...

Current year rule

Wherever the ‘accounting period’ end date is [i.e. 31^st December 2011], profit generated in the previous 12 months are subject to tax year in which the end date falls.

Accounting period

1^st Jan 11 31^st Dec 11

(10,000)

---I------------------I----------------------------------I-----------------I----------------

6 April 11 5^th April 12

Tax Year 11/12

Dec 31^st: profits = 10,000
= Tax year 11/12 = 10,000 (December 31^st 11 ends in Tax year 11/12)

Opening year rule

FIRST YEAR

Profits are taxed from the date of commencement to the next 5^th April

Tax Year which commencement date falls within

1^st Jan 11 31^st Dec 11

(10,000)

---I----------------------------------I-----------------------I

5 April 11

Commencement date = 1^st January 2011 Tax year 10/11
1^st Jan – 31^st Dec = 10,000 profit
10,000 /12 = 833 profit each month
833 X 3 = 2,500 profit for January / Feb / March (3 months)
Tax 10/11 = 2500.

SECOND YEAR

RULE: Either:

Profits of first 12 months are taxed [therefore overlap relief]; or
Where a full accounting period can be allocated to the second tax year, the profits from that accounting period.

Accounting period

1^st Jan 11 31^st Dec 11

(10,000)

---I------------------I----------------------------------I-----------------I----------------

6 April 11 5^th April 12

Tax Year 11/12

Tax year 11/12 – profits of first 12 months are taxed (so profit from 1^st January 11 – 5^th April 11 are taxed for a second time)
Overlap profit = 2,500 (available when business ends)

Closing year rule

Notional accounting period running from the day AFTER the end of the last accounting period [i.e. 1^st Jan] to be assessed up to the date of cessation [30^th June].

Overlap relief is deducted from final accounting period

Accounting period

1^st Jan 11 30^th June - bus closes

(36,000)

---I------------------I-----------------+-----------------------------I-----------------I-------

6 April 11 5^th April 12

Tax Year 11/12

Business closes on 30^th June 2011. Makes 36,000...

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