Self Assessment - date books are made up to

Percy733

Hi,

So I'm filing a self-assessment tax return for the first time (do some freelance work on the side) and am slightly confused over my options when it comes to what date your books are made up to, as the return says it can be any date?

Basically I got a big portion of my freelance readings in 17 paid in June and know that if it's on this year's tax return rather than next year's it will be taxed at a lower rate because my standard PAYE wages will be a lot higher on next year's tax return.

So basically my question is can I make my books up to the end of June to include more freelance earnings that will be taxed at a lower rate, & if so, what is the downside to not doing making up your books to April 5th? You have too keep the same date going forward but is that a tactical issue?

Thank you.

Dazed_and_confused

Having an accounts year end which isn't in the tax year of the return you are completing (tax return is for the year 06:04:2016 - 05:04:2017 I presume and you want to accounts to ??:06:2017 which is in 2017:18) is likely to add some complexity to your return and it may be sensible to take professional advice.

00ec25

are you a sole trader or a limited company?
read up on overlap profits - you have been warned !!!!!!!

random websites covering the topic:
http://www.taxattack.co.uk/basisperiods.php

https://www.gov.uk/government/publications/how-to-calculate-your-taxable-profits-hs222-self-assessment-helpsheet

https://www.conceptfinancialplanning.co.uk/2012/05/22/accounting-periods-for-sole-traders/

http://www.capricaonline.co.uk/tax-for-startups-picking-a-year-end-date-applies-sole-traders-and-partnerships-only/

https://www.gov.uk/first-company-accounts-and-return

[Deleted User]

Percy733 wrote: »

Hi,

So I'm filing a self-assessment tax return for the first time (do some freelance work on the side) and am slightly confused over my options when it comes to what date your books are made up to, as the return says it can be any date?

Basically I got a big portion of my freelance readings in 17 paid in June and know that if it's on this year's tax return rather than next year's it will be taxed at a lower rate because my standard PAYE wages will be a lot higher on next year's tax return.

So basically my question is can I make my books up to the end of June to include more freelance earnings that will be taxed at a lower rate, & if so, what is the downside to not doing making up your books to April 5th? You have too keep the same date going forward but is that a tactical issue?

Thank you.

Let's say that you started on 1st July 2016 and want to make your accounts up to 30th June 2017.

You must declare the proportion of that year which relates to 2016/17 tax year. That is 279/365 of the profit.

For 2017/18 tax year you must declare the profits where the account period ends in that tax year - the whole year ended 30th June 2017 - yes 2017.

The period from 1st July 2016 to 5th April 2017 would have been taxed 'twice' - that is your overlap profit to be carried forward to the following years.

For 2018/19 you will declare the profits for the accounting year 1st July 2017 to 30th June 2018 and so on.

You can change your accounting year if you so wish.