A basis period is the time period for which a sole trader or partnership pays tax each year. Usually your business’s basis period will be the same as its accounting year. If you change your business’s accounting year end, or when your business stops trading, then you will also have to check the basis period rules.
Can an accounting period be more than 12 months?
It can’t be longer than 12 months and is normally the same as the financial year covered by your company or association’s annual accounts. It may be different in the year you set up your company. Your accounting period affects your deadlines for paying Corporation Tax and sending (‘filing’) a Company Tax Return.
What do you need to know about basis periods?
Therefore, the target reader is assumed to be conversant with the relevant basic terms such as basis year, calendar year, basis period, year of assessment (YA) and accounting date. Determining the basis period for a YA is important as it determines the period in which:
When does the year of assessment and basis period start?
Since income tax is charged on a preceding year basis, it is important to distinguish between a “year of assessment” and the “basis period” for a year of assessment. Each year of assessment (YA) or statutory tax year starts on the first date of the year ie 1 January and ends on 31 December.
What does basis period mean in income tax?
Another term that commonly appears in taxation is “basis period”. This means the period of income relative to a year of assessment. For example, the “basis period” for the year of assessment 2015 is the year 1 January 2014 to 31 December 2014 and it is the income of this period that is charged in 2015.
Which is the basis period for the Ya?
This subsection stipulates that, where a set of accounts have been made up for a period of 12 months ending on a day other than 31 December, that period shall constitute the basis period for the YA. Hence, a financial year or an accounting year ending on, for example, 30 June each year, will constitute the basis period of the relevant YA.
