Part 2Trading income

Chapter 17Adjustment income

Treatment of adjustment income and adjustment expense

C1232Treatment of adjustment income

1

Adjustment income is treated as arising on the last day of the first period of account for which the new basis is adopted.

2

But this is subject to sections 235 (cases where adjustment not required until assets realised or written off) and 236 (change from realisation basis to mark to market).

3

Adjustment income is treated for the purposes of Chapter 1 of Part 10 of ICTA (loss relief) as profits of the trade for the tax year in which tax is charged on it.

4

In the case of an individual whose income from the trade is—

a

earned income within section 833(4)(c) of ICTA, or

b

relevant UK earnings within section 189(2)(b) of FA 2004,

adjustment income is similarly earned income or relevant UK earnings.