Test your understanding
These questions are intended to get you thinking about some of the various tax issues that you need to be aware of in respect of the taxation of an unincorporated entity. They may highlight some areas of your basic tax knowledge that need to be worked on.
(1). Nora began trading on 1 September 2024. Her tax-adjusted trading profit for the year ended 31 August 2025 is £39,240.
What is Nora’s taxable trading income for the first tax year of trading?
(2). Zhou began trading on 1 June 2024 and is preparing accounts to 31 December each year. Her tax-adjusted trading profits for her first three trading periods are:
| £ | |
|---|---|
| Seven months ended 31 December 2024 | 22,750 |
| Year ended 31 December 2025 | 64,800 |
| Year ended 31 December 2026 | 85,800 |
What is Zhou’s taxable trading income for her first two tax years of trading?
(3). Cobb’s transition profits for the tax year 2023/24 were £23,000. In 2023/24 and 2024/25 £11,600 of these profits were subject to tax.
On the assumption that Cobb does NOT make an election in respect of the taxation of transition profits for the tax year 2025/26, how much of his transition profits will be subject to income tax in that year?
(4). Paula began trading on 1 June 2024. She has a tax-adjusted trading loss for the tax year 2025/26.
What are the alternative reliefs available in respect of this trading loss?
