Juanita has contacted you and requires advice on the timing of her ceasing to trade.

Juanita:
– Has carried on a business as a sole trader for many years, preparing accounts to 30 June annually.
– Following Don’s death, intends to cease trading and retire.
– Would like to cease trading on 28 February 2017, in which case the business will be sold to an unconnected person.
– Is willing to continue to trade until 30 April 2017, when Lexi will be able to take over the business.
– Does not anticipate having any other source of taxable income in either of the tax years 2016/17 or 2017/18.

Juanita’s business:
– Has taxable trading profits of £51,000 for the year ended 30 June 2016.
– Has budgeted tax-adjusted profits of £48,000 (before capital allowances) in the period ending 28 February 2017.
– Has budgeted further taxable profits of £4,000 per month if Juanita continues to trade after 28 February 2017.
– Has overlap profits from commencement of £17,000.
– The tax written down value on the main pool was £nil at 1 July 2016.
– The market value of the assets in the main pool will be £6,000 at the date of cessation.

Required:
Advise Juanita, by reference to the increase in her trading income after tax and national insurance contributions, whether it would be beneficial for her to continue to trade until 30 April 2017, rather than ceasing to trade on 28 February 2017. You should assume any elections which are beneficial to Juanita are made and should support your advice with a brief explanation of the available capital allowances in each case.

Note: Where necessary, you should assume that there are four weeks in each month of the years 2016 and 2017. (12 marks)