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Where Taxpayers and Advisers Meet

Sole Trader different Tax/Accounting Year

JJay
Posts: 1
Joined: Wed Sep 11, 2019 3:01 pm

Sole Trader different Tax/Accounting Year

Postby JJay » Wed Sep 11, 2019 3:13 pm

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
Posts: 95
Joined: Mon Mar 11, 2019 4:22 pm

Re: Sole Trader different Tax/Accounting Year

Postby Jholm » Wed Sep 11, 2019 5:21 pm

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
Posts: 3094
Joined: Sat Feb 01, 2014 3:26 pm

Re: Sole Trader different Tax/Accounting Year

Postby bd6759 » Wed Sep 11, 2019 9:02 pm

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
Posts: 3094
Joined: Sat Feb 01, 2014 3:26 pm

Re: Sole Trader different Tax/Accounting Year

Postby bd6759 » Fri Sep 13, 2019 10:23 am


Your second base period will be the 12 months ending on 31/12/2020.
I mean 31/12/2019


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