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Dear tutor,
I have question regarding trading income question.
Ronald commenced self-employment on 1 Jan 2019. He had a tax adjusted trading profit on 3.840 for the four-month period ended 30 April 2019, and 12,060 for the year ended 30 April 2020. These figures are before taking account of capital allowance.
Question is to calculate the income tax payable by Ronald for the tax year 2019/20.
I thought trading income for 19/20 should be 3,840 (period ended 30 April 2019) but the answer also includes profit till 30 april 2020. Is this wrong anwer or am I missing something?
Thank you for your help in advance.
You need to go back to Chapter 6 study notes and lectures as you are not applying the correct basis of assessment. – you are indeed “missing something” here – you have not learned the rules for the bases of assessment in opening years – specifically here the rules that apply in the 2nd tax year of trading!
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