SolvedPM163550 | Losses and overlap relief
From HM Revenue & Customs · Partnership Manual
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 |