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John started in business as a sole trader on 1 January 2017 and elected to draw up accounts to 31st December, each year
John started in business as a sole trader on 1 January 2017 and elected to draw up accounts to 31st December, each year. What basis period should you use to calculate his taxable profit for 2017/2018?
Expert Solution
- For 2016/17 its basis period will be 1st January 2017 - 5th April 2017, because the first basis period always ends on the fiscal year end.
- For 2017/18 its basis period will be 1st January 2017 - 31st December 2017, because as the first accounting year is 12 months long, the basis period ends on the same date as the accounting year.
- For 2018/19 its basis period will be 1st January 2019 - 31st December 2019. The profits made in the period 1st January 2017 - 5th April 2017 will be taxed both in 2016/17 and 2017/18.
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