Tax period query

WhyWhat7

Hi

My partner started freelance work in August 2021. Between 6 April 2021 and 5 April 2022 she earned around £10,000 so less than the Personal Allowance threshold of £12,570. 

She earned another £2,000 or so between 5 April 2022 and 31 July 2022.

When filing her tax return is it possible to use a tax year up to 32 July 2022 rather than up to 5 April 2022? She would stay under the Personal Allowance threshold and i am just thinking it may minimise her tax for the current financial year.

I know this sort of thing is possible for companies but don't know about individuals. 

Thanks!!

WhyWhat7

Sorry the above should say 31 July rather than 32 July of course!

Dazed_and_C0nfused

No.  She will still need to complete a tax return for 2022:23 in due course.

Don't think HMRC's computer system could cope with people choosing their own individual tax years 😳

WhyWhat7

Thanks. I know she'll have to complete a tax return for 2022:2023 but I was wondering whether she could have a tax year that ran from July to July for it rather than April to April. I thought it may be a long shot, thanks though!

[Deleted User]

WhyWhat7 said:

Thanks. I know she'll have to complete a tax return for 2022:2023 but I was wondering whether she could have a tax year that ran from July to July for it rather than April to April. I thought it may be a long shot, thanks though!

I am thinking that you mean ‘have an accounts year’ ending on 31st July rather than a tax year ending on 31st July. 

You can but, in this instance, would not be a good idea. 

If she did:

2021/22 would be based on 8/12 of total profit for 12 months ended 31 July 2022 - 8/12 x 12000 which is £8000.

2022/23 would also be based on the 12 months to 31st July 2022 - £12000. 

Yes - £8000 of profits will have been assessed twice! This is known as overlap profit and can be used to reduce final year profits or when accounts year changed to later in the year. 

Overall - not a good idea!

summer_daze009

I am sure you are aware of this but just a reminder that your tax return for 21/22 has to be filed online by midnight on tuesday

Jeremy535897

With the new rules on basis periods due to come into force shortly, requiring you to apportion your profits between tax years if your year end is not 31 March or 5 April, it would take an extremely strong reason to make you choose any other year than the tax year to prepare your accounts for (and ultimately MTD will make it even worse).

[Deleted User]

Jeremy535897 said:

With the new rules on basis periods due to come into force shortly, requiring you to apportion your profits between tax years if your year end is not 31 March or 5 April, it would take an extremely strong reason to make you choose any other year than the tax year to prepare your accounts for (and ultimately MTD will make it even worse).

Yes - it’s taken a long while but it was always going to happen. Oh for the days of CY, CY or PY, PY! Only 27 years ago!

sheramber

27 years-  that makes me feel old!