The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
When choosing an accounting date for a business, there are advantages and disadvantages in picking certain dates.
There are three key factors to consider:
deferred tax position
There can be also short-term benefits in selecting, or changing to, a particular year end. This is of relevance where there is a change in tax rate or taxpayers’ wish to crystallise the deferred tax asset of overlap profits.
There are advantages to having a year end that finishes early in the fiscal year. An early year end, such as 30 April, means that there is a longer gap between making profits and paying tax. Compare a March and an April year end in 2019:
There is only one month’s difference in year end, but the April year end benefits by not having tax falling due for an extra year.
This can be a double-edged sword. This benefit can be cancelled out by the tax liability being disassociated, or ‘alienated’, from the relevant profits. A client with an early year end can easily forget how their liability has arisen. Also, very few individuals who run their own business will simply set aside the money to accumulate interest. Therefore, the taxpayer needs to be reminded of their future liabilities and the bases on which they arise.
The main cash flow benefit arises where profits are fluctuating. Where profits rise from one year to the next, this defers the increased tax liability by 11 months. The business has longer to provide for income tax.
Where profits fall from one year to the next, there is suffi
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
This guidance note provides an overview of the steps businesses need to take if aspects of their business change, and as a result, they need to notify HMRC about the change.Changes to name and / or addressIf a business changes its name and / or its address then it is required to notify HMRC of the
This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic. For a flowchart outlining the procedure for claiming input
Business asset disposal relief (previously known as entrepreneurs’ relief) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. For disposals made on or after 11 March 2020, the relief is available on up to
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.