Does the year-end for my business matter if I am self-employed?

Usually it is best to choose a time when you will be best able to finalise your records for your accountant. 

However, choosing a year end closer to the beginning of the tax year will usually mean it takes longer for increased profits to take effect in an increased tax bill, creating a cash advantage for you. On the other hand, a decrease in profits will take longer to result in a lower bill.  

Your first period for tax will run from when you began trading until the next 5th April, the income tax year end. Once your business has been up and running for two or three years, depending on your chosen year end, you will be taxed each year on the 12 months up to your year end in each tax year. For example, if your year end was 30th June 2020, your results would be included in your 2020/21 tax return, which does not need to be filed until 31 January 2022. 

If you decide to change your year-end, there are also rules to determine the period you will be taxed upon. Speak to your accountant if you are unsure what year end to choose. 
 

Date published 7 Jul 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.