change basis period due to covid ?

[billyg]

Hi, I was wondering whether i should extend my basis period for 19/20 to 18 months, as my income was severely affected ?

thanks

[bd6759]

That depends

[billyg]

that depends on what please ?

[AdamS93]

It will depend on the numbers involved (namely profits), your current accounting period and what you are trying to achieve.

[robbob]

There are restrictions with regard to changing basis periods - probably best to read the linked advise as a starter.


https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim81045

[billyg]

ok thanks for your helo, I am trying to average out months in the latter part of the year when i had no income to ones in the previous year when things were running more smoothly.

[bd6759]

Basis periods follow the accounting date, so I presume it is your accounting date you want to change.

You haven’t said what your usual accounting date is.

You can change the date, but it might not have the effect you think.

If your usual date is 31 March 2020, and you change the date to 30 September 2020, your basis periods will be:
For 2019-20: 12 months to 30 September 2019
For 2020-21: 12 months to 30 September 2020

[billyg]

Thanks, Ive read through those pages but tbh dont fully understand.
for the 2019-20 tax year my usual accounting date is 5th April 2029 thought that i could maybe change it to 5 sep 2020 ? (but that would make the year end in 20/21.)
giving me 18 months accounts which I can average out to get a lower profit ?
im not sure if it works that way ?

thankd

[billyg]

but as you say if i change to sep my accounting dates will only be the 12 months to sep 20, what happens with the missing 6 months ?

thank you

[bd6759]

If you change to 5 September, that would be 17 months. But the length only really affects the length of the overlap period.

There is no missing 6 month.

For 2019-20: 12 months to 5 September 2019
For 2020-21: 12 months to 5 September 2020

Both are 12 months.