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Year-end for sole trader

Year-end for sole trader

What is the best year end for a sole trader to choose? The client started in business on 1 Feb 2001 and work is not seasonal.Is 30 April still the best date to defer tax liability ?If choosing 30 April, can he extend his first accounting period to 30/4/02?
I Taylor


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By Anonymous
07th Feb 2001 08:18

Deferred Tax but Overlap!
I do not consider there to be an “optimal” year end for every client. I believe it depends on their personal circumstances, wishes and profits for the various periods.

You are correct in stating that a 30 April year end defers tax but I find many clients, once they realise they are paying tax on the same profits twice, prefer a 31 March year end. This is despite a detailed explanation of overlap profits and there uses on cessation. Indeed some clients are asking for their year ends to be changed to 31 March so they can use overlaps profit from the transitional period of self assessment.

A client who commenced on 01/02/01 and took their first year to 30/04/02 would have the following basis period:-

Basis period (Current Year) 01/02/01 to 05/04/01

Basis period (First Twelve Months) 01/02/01 to 31/01/02 (Overlap 01/02/01 to 05/04/01)

Basis period (Twelve months to normal accounting date) 01/05/01 to 30/04/02 (Overlap 01/05/01 to 31/01/02)

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