Choice of accounting date under old basis period rules

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

The allocation of accounting profits to basis periods for tax purposes was reformed by FA 2022, s 7, Sch 1 and replaced with a tax year basis from the tax year 2024/25. The rules which apply for the tax year 2024/25 onwards are set out in the Tax year basis from 2024/25 onwards guidance note and the rules for the transitional tax year of 2023/24 including businesses starting in 2023/24 are set out in the Basis period transitional rules 2023/24 guidance note. The details below therefore are only relevant under the old basis rules.

Factors to consider

When choosing an accounting date for a business, there are advantages and disadvantages in picking certain dates.

There are key factors to consider:

•
cash flow
•
administration, and
•
other short term factors

There can be also short-term benefits in selecting, or changing to, a particular year end. This is of relevance where there is a change in tax rate or taxpayers’ wish to crystallise the deferred tax asset of overlap profits.

Cash

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Owner-Managed Businesses

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more

Value Added Tax

Exemption ― burial and cremation

Exemption ― burial and cremationThis guidance note provides an overview of the VAT treatment of services that are provided in connection with the burial or cremation of human remains.VAT treatmentThe following services are exempt from VAT:•the disposal of the remains of the dead•making arrangements

14 Jul 2020 11:38 | Produced by Tolley Read more

Corporation Tax

Research and development expenditure credit (RDEC)

Research and development expenditure credit (RDEC)This guidance note provides information on how research and development expenditure credits (RDEC) are calculated and utilised. The Qualifying expenditure for R&D tax relief guidance note provides information on what expenditure qualifies for

14 Jul 2020 13:24 | Produced by Tolley in association with Will Sweeney Read more

��Ƶ