# Finance Act 2022, Paragraph 70: Trade profits if there is a transition part of the basis period for the tax year 2023-24

Extent: E+W+S+N.I.

(1) Sub-paragraph (2) applies if there is a transition part of the basis period for the tax year 2023-24 (see paragraphs 65(3) and 67(4)(a)).
(2) In calculating the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005, take the following Steps.
Step 1
Determine the amount of the profits of the tax year 2023-24 attributable to the standard part of the basis period for that tax year.
To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the standard part of the basis period for that tax year.
Step 2
Determine the amount of the profits of the tax year 2023-24 attributable to the transition part of the basis period for that tax year.
To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the transition part of the basis period for that tax year.
Step 3
Deduct from the amount given by Step 2 the amount of any deduction for overlap profit allowed under this Part of this Schedule (see paragraph 68).
Step 4
Calculate the sum of the amounts given by Steps 1 and 3.
If the amount given by either or both of—
(a)Step 3, and
(b)this Step,
is nil, or less than nil, the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is the amount given by this Step (and see paragraph 71 for the treatment of a loss, or an increased loss, for the tax year 2023-24 arising from this Step).
Otherwise, proceed to Steps 5 and 6.
Step 5
For the purposes of Step 6, and paragraphs 72 to 75, the amount of the trader’s “transition profits” for the tax year 2023-24 is the lesser of—
(a)the amount given by Step 3, and
(b)the amount given by Step 4.
Step 6
The amount of the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is—
(a)if the amount given by Step 1 is nil, or less than nil, such amount of the transition profits for the tax year 2023-24 as is treated (in accordance with paragraphs 72 and 73) as arising in that tax year;
(b)if the amount given by Step 1 is more than nil, the sum of that amount and such amount of the transition profits for the tax year 2023-24 as is treated (in accordance with paragraphs 72 and 73) as arising in that tax year.

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Source: https://www.legislation.gov.uk/ukpga/2022/3/schedule/1/paragraph/70 (the official version)
Page: https://openlegislation.uk/finance-act-2022/schedule-1/paragraph-70
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.