Income Tax (Trading and Other Income) Act 2005 section 225ZE

Adjustment: cessation of trading

Section 225ZE deals with how the spreading of compulsory slaughter compensation is adjusted when a farmer permanently ceases trading before the full spreading period has elapsed.

• This section applies when a farmer permanently stops farming before the end of the second of the three consecutive tax years following Year 1.
• The normal profit-spreading calculation in section 225ZD is modified by replacing step 4 with two new steps (steps 4 and 5).
• The revised step 4 requires the total amount deducted under steps 2 and 3 to be divided by the number of tax years (the "remaining tax years") during which the farmer carried on the trade, starting with Year 1.
• The revised step 5 requires the result of that division to be included in the profits of each of those remaining tax years.