BIM72315 - Partnerships: Computation & assessment: Other Income: Losses and Overlap Relief
Example
In 2010/11 Sarah retires from a professional partnership. Her
shares of partnership income for the year, and details of both
losses and overlap profits brought forward, are as follows
| Profit 2010/11 | Losses b/f | Overlap profit b/f | Net profit/(loss) | |
| Case II | £5,000 | nil | £(1,750) | £3,250 |
| Case III | £500 | - | 200 | £300 |
| Case VI | £4,000 | £(1 000) | £(2,000) | £1,000 |
| Schedule A | £750 | nil | £(4000) | £(3,250) |
In addition Sarah has non-partnership income in the year as follows
| Dividends and other taxed income | £5,300 |
| Pension | £11,450 |
The overlap profit associated with the Case II, Case III and
Case VI income has all been absorbed by the profit from those
sources assessable in 2010/11.
But the overlap profit associated with the Schedule A source
cannot be absorbed in full this year. Therefore Sarah has excess
overlap profit of £3,250.
Initially you use the excess overlap relief to reduce the
profit from any other share of untaxed partnership income (other
than Case I/II income):
| Net profit 2010/11 | Less reallocated Sch A overlap profit | Net profit(loss) | |
| Case III | £300 | £(300) | 0 |
| Case VI | £1,000 | £(1,000) | 0 |
| Balance of Sch A overlap profit still unrelieved | £(1,950) |
Give the balance of Sch A overlap profit still unrelieved as a
deduction from any other income for the year
Net profit 2010/11
| Case I | £3,250 |
| Dividends and other taxed income | £5,300 |
| Pension | £11,450 |
| Balance of Schedule A overlap profit still unrelieved | £(1,950) |
| Net total | £18,050 |
