1. Self-Employed Income – Basis of Assessment
Case I/II Basis of Assessment
Year of Assessment
Basis Period
Actual Profits

2. Self-Employed Income – Basis of Assessment
Continuing Business
General Rule
The basis period for the year of assessment is the accounting period of 12 months ending in the year of assessment.

3. Self-Employed Income – Basis of Assessment
Commencement
Year 1
Year 2
Year 3

4. Self-Employed Income – Basis of Assessment
Commencement – Year 1
The assessable profits for the first year of commencement are the profits from the date of commencement to 31st December
It may be necessary to apportion the profits accordingly

5. Self-Employed Income – Basis of Assessment
Commencement – Year 2
Rule 1 – The profits from the 12 month accounting period ending in the second year of trading will be the assessable profits

6. Self-Employed Income – Basis of Assessment
Commencement – Year 2
Rule 2 – Where more than one set of accounts end in the second year the assessable profits are the profits for the 12 months ending on the latest accounting end date in the second year

7. Self-Employed Income – Basis of Assessment
Commencement – Year 2
Rule 3 – Where there is no accounting period ending in the second year of assessment the actual profits (1st January-31st December) for the second year are assessed to tax.

8. Self-Employed Income – Basis of Assessment
Commencement – Year 3
The profits for 12 month accounting period ending in the third year are the assessable profits for the third year
A revision of the profits of Year 2 is carried out in Year 3 and the Year 3 profits may be reduced in certain circumstances

9. Self-Employed Income – Basis of Assessment
Commencement – Year 3 – Second Year Excess
Calculate the Actual Profits for Year 2
Compare to the Assessed Profits of Year 2
Where the Actual Profits are less than the Assessed Profits the excess amount is deducted in Year 3
Where the Actual Profits are more than the Assessed Profits no adjustment is made

10. Self-Employed Income – Basis of Assessment
Cessation – Final Year of Assessment
The assessable profits are the profits from 1st January to the date of cessation

11. Self-Employed Income – Basis of Assessment
Cessation – Penultimate Year
When the business ceases a review of the second last year must be undertaken
The actual profits for the penultimate year are calculated
Where the actual profits are more than the assessed profits the assessment for the penultimate year is revised to the actual profits
Where the actual profits are less than the assessed profits no revision occurs

12. Case I/II – Basis of Assessment
Short lived business
Assessment on actual profits, where a business commences and ceases within 3 years
Applies where trade or profession:
Commenced and is permanently discontinued within third year of assessment
Total profits charged to income tax exceed aggregate profits form commencement to cessation