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HMRC internal manual

Business Income Manual

Partnerships - computation and assessment: other income: overlap relief

S856 Income Tax (Trading and Other Income) Act 2005

The notional business rules (see BIM82295) only determine the basis periods for shares of untaxed income. Therefore, in the absence of any rule to the contrary, each source of untaxed income would have an associated overlap profit that could only be relieved by set off against income from that same source.

There is therefore a special rule which provides that any amount by which the overlap relief exceeds the profits of the partner’s notional business is deducted in calculating the partner’s income for the tax year.