Sole Trader different Tax/Accounting Year

[JJay]

I left a paye job in Oct 18 and started a Sole Trader business & I'd like to run my accounting year to 31st Dec. I have 2 queries: do I compile my first set of accounts to cover just those 2 months of trading or am I required to wait until 31st Dec 2019 and compile accounts for 14 months? if the former is acceptable and given I made a loss during this 2 month startup period, can I offset those losses against the paye paid in 2018/19 when I complete my self assessment return?

Thanks

[Jholm]

I would very much suggest that you appoint an account/adviser officially if you are running those dates. You will need to consider overlap profits/relief and I have seen way too many people get this wrong when doing it themselves.

[bd6759]

You can compile your accounts to whatever date you like. You can have a 2 month period or a long 14 month period to 31 December. But you really should have thought about that before now.

For tax purposes, your first base period ends on 5 April, so it will be either:
a) your 31/12/18 accounts plus 3/12ths of 31/12/2019, or
b)if you have a 14 month period to 31/12/2019, 5/14ths of that period.

Your second base period will be the 12 months ending on 31/12/2020. Either your 12 month accounts or 12/14ths if you a long period.

Losses can be set against other income to reduce tax.

[bd6759]

Your second base period will be the 12 months ending on 31/12/2020.

I mean 31/12/2019