How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4423
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

A question on British Taxation. If I start a new business -

Resolved Question:

A question on British Taxation.If I start a new business - do I need to declare taxes at the end of the financial year or can I declare all the year after.
I remember reading somewhere that you can wait until you have traded for a complete financial year - is this true ?
Submitted: 19 days ago.
Category: Tax
Expert:  bigduckontax replied 19 days ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Are you going to trade as self employed or through a limited company?

Customer: replied 19 days ago.
Thank you.
As a sole trader - what is the difference ?
Expert:  bigduckontax replied 19 days ago.

Considerable, under self employment you pick your own accounting date, the last day of the month you wish it to be. The amounts declared for tax are then [source: Ward Goodman]:

Business starts

Begins with the date the trade starts and ends with 5 April of that tax year

2 Accounting period ends in Year 2 - if the period is less than 12 months 12 months from the date the trade starts -

if the period is more than 12 months 12 months ending with the accounting date -

if the period is 12 months 12 months ending with the accounting date

Accounting period does not end in Year 2 6 April to 5 April of that tax year

3 Continuing business 12 months ending with the accounting date

You will immediately see that under this system the same income can be taxed twice in different years; this is known as overlap and should be carefully recorded. Overlap relief can be claimed at any time, but many traders keep it until they cease to trade.

I do hope that you have found my reply of assistance.

Customer: replied 19 days ago.
Thank you. I am a bit confused.
If I started a business in June 2017 and chose to use the Tax year as my accounting and trading year - is my first tax return from June 2017 to April 5th 2019 ?
Expert:  bigduckontax replied 19 days ago.

Year 1, 17/18 tax year - Jun 17 - Mar 18

Year 2,18/19 taxyear - Apr 18 - Mar 19 etc

No overlap, simple as the meerkat in the TV advert would say!

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 19 days ago.
Will gladly rate you.
Still confused - that's different. Back to your first explanation - how can the Tax be due in year 2 ? What dates would that relate to - please give examples.
Expert:  bigduckontax replied 19 days ago.

The profit in the time periods I have set out. It is the third option in case 2 of my original response.

Customer: replied 19 days ago.
Just to be clear - if my accounting date is end of June - then having started in June 2017 - the first tax return is in April 2019 for the accounting year June 2017-June 2018. With paper return in by October 2019 and online by Jan 2020 ?
Expert:  bigduckontax replied 19 days ago.

With respect it is not. You said:

'chose to use the Tax year as my accounting and trading year'

Hence my reply.

Customer: replied 19 days ago.
I probably wasn't clear enough - I was asking about another scenario - if my accounting and trading year is June to June - would the above apply ?
Expert:  bigduckontax replied 19 days ago.

No it would not and your position would become more difficult as an overlap would be involved.

17/18 - Jun 17 to Mar 18

18/19 - Jul 17 - Jun 19

19/20 - Jul 17 - Jun 19

As you can see a real can of worms and far more complex!

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 19 days ago.

Thank you for your support.