Income Tax (Trading and Other Income) Act 2005 section 871

Apportionment etc. of miscellaneous profits to tax year

Section 871 deals with how miscellaneous income profits or losses should be allocated to a tax year when the accounting period does not coincide with the tax year.

• Where a period of account does not match the tax year, profits or losses must be apportioned across the relevant tax years
• Apportionment is carried out by splitting profits or losses of a period of account into parts falling in different tax years, and combining them with amounts from other periods as needed
• The default method of apportionment is based on the number of days in each part of the period
• An alternative method of measuring the length of periods may be used provided it is reasonable and applied consistently for the income in question