BIM86018 - TMIA - Computation: Partial Relief: Multiple Trades

If the individual qualifies for partial relief and their relevant income for the year includes receipts from more than one relevant trade, then the profits for the tax year of all their relevant trades are calculated using the following steps for each trade.

Step 1 – Calculate total receipts of each trade:

Individuals should calculate the total amounts which would be brought into account as a receipt in calculating the profits of each of their relevant trades for the tax year. A separate calculation is needed for each trade.

Step 2 – Subtract the deductible amount from receipts, allocating as desired to each trade:

Individuals then subtract an amount from the total receipts for each trade given in Step 1 above. They cannot also deduct any expenses in calculating the profits of any relevant trade that would otherwise be allowable.

This will leave them with a figure of taxable profits for each of their trades.

The amount of allowance to be subtracted from different trades can be distributed between the different trades based on the individual’s preference. However, the amounts subtracted under this step cannot be used to produce a loss for any trade(s).

The total amount to be subtracted from each different relevant trade is the deductible amount. This deductible amount must not exceed the trading allowance.

If an individual is claiming overlap relief during the year (because they are in their final year of trading, or have recently changed accounting date), then continue to Step 3.

Step 3 – Subtract overlap relief:

The subtotal given in Step 2 is then reduced by subtracting a deduction for overlap profit allowed in calculating the profits of the particular trade(s) for the tax year.

More guidance on overlap relief can be found at BIM86044.