What period of account will lead to no overlap profits for a business starting on 1st October 2020?

The correct answer reflects a period of account that is structured in a way that avoids overlap profits for a business starting operations on 1st October 2020. Overlap profits occur when a business's accounting periods overlap, leading to the possibility of being taxed on profits that are counted in more than one accounting period.

A period of account ending on 5th April 2021 aligns perfectly with the tax year, which runs from 6th April to the next 5th April. Starting operations on 1st October 2020 and then having the first accounting period run to 5th April 2021 ensures that the profits made from October 2020 until April 2021 are only counted once for the tax year, and there’s no previous period's profits included in this calculation.

In contrast, other options may lead to overlap. For instance, an accounting period that ends on a date before 5th April 2021 could result in the need to include profits from multiple periods, as the next accounting period would then overlap with the previous one. By selecting the option that concludes right at the end of the first tax year, the choice effectively prevents any overlap of profits, allowing for a clear and straightforward accounting scenario.