Income Tax (Trading and Other Income) Act 2005 section 202

Final tax year

Section 202 sets out how the basis period is determined for the final tax year in which a person permanently ceases to carry on a trade.

• When a trade permanently ceases, the final basis period starts immediately after the end of the previous tax year's basis period and ends on the date the trade ceases.
• If the trade both starts and permanently ceases within the same tax year, the basis period runs from the start date to the cessation date.
• The general rule covers the more usual case where trading has been ongoing across multiple tax years.
• The special rule for trades starting and ceasing in the same tax year ensures the entire short period of trading is captured in a single basis period.