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 | 拢5,000 | nil | 拢(1,750) | 拢3,250 |
| Notional business | - | - | - | - |
| Savings income | 拢500 | - | 拢(200) | - |
| Miscellaneous income | 拢4,000 | 拢(1,000) | 拢(2,000) | - |
| Property income | 拢750 | nil | 拢(4,000) | - |
| Totals | 拢5,250 | 拢(1,000) | 拢(6,200) | - |
In addition Sarah has non-partnership income in the year as follows:
Dividends and other taxed savings income 拢5,300
Pension 拢11,450
The overlap profit of 拢6,200 associated with the notional business cannot be absorbed in full this year. Therefore Sarah has excess overlap profit of 拢1,950.Sarah鈥檚 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 拢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 | 拢3,250 |
| Dividends and other taxed savings income | 拢5,300 |
| Pension | 拢11,450 |
| Balance of notional business overlap profit still unrelieved | 拢(1,950) |
| Net total | 拢18,050 |