What must be done to the profits from the first 12 months of trading according to the second tax year rule?

According to the second tax year rule, the profits generated in the first 12 months of trading are recognized as part of the current tax year when calculating tax liabilities. This means that instead of deferring the taxation of profits from that initial trading period to a later date, they are included in the taxable income for the first period that the business is assessed.

This approach ensures that the tax system accurately reflects the income generated by the business during its initial period of operation, preventing any benefits or delays in tax obligations that might arise from ignoring or carrying over those profits. Consequently, all income earned from trading activities in the first year is considered as taxable income for the current year, highlighting the importance of this rule in maintaining consistency and fairness in the taxation process for new businesses.