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

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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 ?

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 6 months ago.
Thank you.
As a sole trader - what is the difference ?

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 6 months 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 ?

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!

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Customer: replied 6 months 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.

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

Customer: replied 6 months 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 ?

With respect it is not. You said:

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

Hence my reply.

Customer: replied 6 months 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 ?

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

Thank you for your support.