Test your understanding
(1). Nora began trading on 1 May 2016. Her first few months of trading were very profitable but since then her monthly profits have been gradually falling.
Explain the relevance of this information to Nora’s choice of year end.
(2). Miza began trading on 1 September 2016. His tax adjusted profits per month are set out below.
| £ | ||
|---|---|---|
| September to October 2016 (two months) | 4,000 | |
| November 2016 to March 2017 (five months) | 3,000 | |
| April to September 2017 (six months) | 6,000 | |
| October 2017 onwards | 10,000 |
If Miza adopts a 31 May year end, what will be his taxable trading profit for the first two tax years of trading?
