Income Tax (Trading and Other Income) Act 2005 section 200

Second tax year

Section 200 sets out how to determine the basis period for the second tax year in which a person carries on a trade, depending on when the accounting date falls and whether the trade continues.

• If the accounting date in the second tax year falls less than 12 months after the trade started and the trade has not permanently ceased, the basis period is the first 12 months from the date the trade began.
• If the accounting date falls 12 months or more after the trade started and the trade has not permanently ceased, the basis period follows the general rule under section 198 — that is, the 12 months ending with the accounting date in that tax year.
• If there is no accounting date in the second tax year and the trade has not permanently ceased, the basis period is simply the tax year itself (6 April to 5 April).
• If the person permanently ceases to carry on the trade during the second tax year, the basis period is determined under section 202(1), which deals with the final tax year of trading.