Commentary

B5.171 Tests for relief

Business tax
Business tax | Commentary

B5.171 Tests for relief

Business tax | Commentary

B5.171 Tests for relief

Two-year averaging

Where the profit of one of two consecutive tax years is 75% or less (70% or less before 2016/17) than the profit of the other year (or is nil), the profit of each year is treated as the average of the two profits1. However, for tax years before 2016/17 there was a marginal relief, where the profits of one year exceeded 70% but did not exceed 75% of the other year2. This marginal relief was designed to ensure that there was a more gradual change in profits assessed where full averaging ceases to apply. The marginal relief operated by adjusting the profits of both consecutive years (deducting the adjustment from the higher figure and adding it to the lower figure). The amount of the adjustment could be expressed

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