PM163550 - Losses and overlap relief

Example

In 2012/13 Sarah retires from a professional partnership. Her shares of partnership income for the year, and details of both losses and overlap profits brought forward, are as follows

Income	Profit 2012/13	Losses b/f	Overlap profit b/f	Net profit/(loss)
Trading income	£5,000	nil	£(1,750)	£3,250
Notional business	-	-	-	-
Savings income	£500	-	£(200)	-
Miscellaneous income	£4,000	£(1,000)	£(2,000)	-
Property income	£750	nil	£(4,000)	-
Totals	£5,250	£(1,000)	£(6,200)	-

In addition Sarah has non-partnership income in the year as follows:

Dividends and other taxed savings income £5,300

Pension £11,450

The overlap profit of £6,200 associated with the notional business cannot be absorbed in full this year. Therefore Sarah has excess overlap profit of £1,950.Sarah’s partnership share of the savings, miscellaneous and property income counts as profits from her notional business. The overlap profit associated with that notional business totals £4,250 after deduction of losses brought forward.

The balance of notional business overlap profit is given as a deduction from any other income for the year

Net profit 2012/13

Income	Profit
Trading income	£3,250
Dividends and other taxed savings income	£5,300
Pension	£11,450
Balance of notional business overlap profit still unrelieved	£(1,950)
Net total	£18,050