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Question 2 Timothy has been trading for many years preparing his accounts to 31 December...

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Accounting

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Question 2 Timothy has been trading for many years preparing his accounts to 31 December each year. He decided to change his accounting date to 30 June. His first period prepared to new date was 1 January 2019 to 30 June 2019, which showed a profit of 34,320. The previous year ending 31 December 2018 showed a profit of 65,410. On 30 April 2021 he decided to pass his business to his son and retire. His business profits were as follows: i. 72,980 for year ended 30 June 2020, ii. 46,760 for period ended 30 April 2021. He had overlap profits from the first periods of trading of 6,120 which is a profit for 2 months. Required: Calculate Timothy's trading income for all tax years starting from 2018-19. Income Tax rates and taxable bands Starting rate for savings : 0% Starting rate for savings limit 5,000 Personal savings allowance : 1,000 (maximum) Basic rate 20% Higher rate 40% Additional rate 45% Basic rate limit 37,500 Higher rate limit 150,000 Additional rate over 150,000 Dividend allowance 2,000 Note: dividends are taxed at 7.5%, 32.5% and 38.1%

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