L5 Fiscal year and basis period Flashcards
when does a tax year (fiscal year) run?
For individuals from the 6th of April (6/4) to the following 5th of April (5/4).
So, for 2018/19:
6/4/18 to 5/4/19.
Although remember HMRC does accept other year ends for sole traders and partnerships.
what is a BASIS PERIOD?
basis period is the accounting year ended in that fiscal year (tax year).
Example if accounting year end is 31st December 2018 then this ends in 2018/2019 fiscal year so will be assessed in that fiscal year
what is Current year basis? (CYB)
The basis of assessment for tax purposes in the UK in which tax is charged in a fiscal year on profits arising in the accounts for the period ending in that tax year
if george who was been trading for a number of years has a year end of 28/2/19 what tax adjusted trading profits are taxed in 18/19
Profit from the year end 28/2/19
James has been trading for a number of years has ye 30/4 what year end will be assessed in 18/19?
profits from the year end 30/4/18
when it is a companies first year of trading how are profits taxed.
they are taxed on the ACTUAL BASIS. so the actual tax adjusted profit falling within the tax year. i.e. from the date of starting the business to the end of that tax year. (5/4/xx)
what is the ACTUAL BASIS.
so the actual tax adjusted profit falling within the tax year. i.e. from the date of starting the business to the end of that tax year. (5/4/xx)
for a companies second year of trading, how are profits taxed?
it depends on the length of the accounting period ending in the 2nd fiscal year.
If AP is:
- 12 months - those 12 months
- < 12 months - first 12 months of trade.
- > 12 months - last 12 months of period
if no accounting period - actual (6/4 - 5/4)
when it is a companies fourth year of trading how are profits taxed.
After the third year of trading, profits will normally be assessed on the current year basis – ie the tax-adjusted profits of the year ending within the tax year
