Goodbye to some old complications and hello to some new ones.
On the surface the basis period changes appear to be good news with the removal of the complicated rules around commencement cessation and changes of accounting date. Instead tax will be payable on profits arising in the tax year.
As you dig a little deeper into these changes however they throw up a host of other potential issues for unincorporated businesses where the accounting year end is something other than 31 March (5 April).
The most obvious is the acceleration of profits taxable in the transition year to align the basis period with the tax year. While some relief will be available in the form of an automatic deduction for overlap profits the chances are that these will be lower than the accelerated profits. This is likely to have a cashflow impact...
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Home >Articles > Trading income: the basis period changes
Trading income: the basis period changes
Goodbye to some old complications and hello to some new ones.
On the surface the basis period changes appear to be good news with the removal of the complicated rules around commencement cessation and changes of accounting date. Instead tax will be payable on profits arising in the tax year.
As you dig a little deeper into these changes however they throw up a host of other potential issues for unincorporated businesses where the accounting year end is something other than 31 March (5 April).
The most obvious is the acceleration of profits taxable in the transition year to align the basis period with the tax year. While some relief will be available in the form of an automatic deduction for overlap profits the chances are that these will be lower than the accelerated profits. This is likely to have a cashflow impact...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
