Unincorporated businesses

Question 1

Unincorporated businesses

Answer 1

Sole trader or partnership

Adjustments to trading profits to correct for tax specific differences to accounting policies. Add back: depreciation, client entertaining, etc.
Deduct: Interest income (this should go into savings income not trading), capital allowances.
New total is trading income.

Question 2

Capital allowances for unincorporated business

Answer 2

Private use should be another pool like main, special. Pro rate the WDA for business portion - this is NOT done for companies only unincorporated businesses.

Question 3

Basis period rules = opening year rules

Answer 3

1st year = actual start of trading to 5 Apr
2nd year = is there an accounting period ending in the second tax year - if yes, how long = 12 months, less or more. If 12 months start CY basis, less than 12 months you need to include first 12 months of trade (use some of PYs figures), if more than 12 months use the last 12 months.
If no accounts then use actual 6 Apr to 5 Apr.

3rd year follow second again - should be on current year by now

Question 4

Current year basis

Answer 4

For continuing business. Tax 12 month account period ending in that year.

Question 5

Closing year rules

Answer 5

Penultimate tax year = current year basis. Final tax year you tax everything not yet taxed less any overlapped profits from opening years.

Question 6

National insurance contributions

Answer 6

Class 2 and class 4 = % / £ is given in tax tables