Taxes Consolidation Act 1997 section 306

Meaning of basis period

Section 306 defines "basis period" for capital allowances purposes under Part 9 and sets out the rules for dealing with overlapping basis periods and gaps between basis periods.

• The basis period for a year of assessment is the period whose profits or gains are used to finally compute income tax for that year under Case I or Case V of Schedule D.
• Where two basis periods overlap, the common period is treated as falling in the first basis period only; where there is a gap between basis periods, the gap is treated as part of the second basis period unless the trade is permanently discontinued in that second year.
• These rules apply equally to professions, employments and offices assessable under Case II of Schedule D or Schedule E.
• For any other person entitled to capital allowances (such as a lessor of plant and machinery outside a trade), the basis period is the year of assessment itself.