Sole Trader - Tax - overlap

DOTTY

Hi All,

I hope someone could just let me know if my thoughts are going in the right direction...... my husband is currently unempoyed but about to start up on November 1st (ish) as a sole trader, i didn't study business tax but opted for auditing............... anyhow i have decided to do all his bookkeeping and accounting in the evenings after work. I am trying to get my head around when to file his first tax return and what period it will cover, i am thinking tax year 09/10 i put in profit (hopefully) from Nov-09 to Mar-10, then for tax year 10/11 i put in profit from Nov-09 to Oct-10, then every year after that it will be Nov-Oct, the overlap will get sorted out if he ceases trading?
thanks, any help will be appreciated

whiterose

Why not just opt for a March 31st year end? The first trading period will be from Nov 09 to March 10, profits from which will go on the April 2010 Return, then you are straight from then on. No overlaps to worry about.
Simples.

Vonni

I totally agree it is so much easier to use 31st March or 5th April as your year end which will save the necessity of calculating overlap which can only be relieved on cessation so you could be waiting for years, better in your pocket than the Gov't. In addition it will be far easier to calculate AIA, WDA.

DOTTY

Thank You

Thank you very much, this sounds the best thing to do, i didn't think you could have such a short year end.
One more thing sorry....... you know AIA up to 50k in the first year, does that mean you can only use this in the first year of trading or could you use any balance left in subsequent years?
Sole traders are all new to me i have been working in industry for the past 7 years and have never worked in practice, sometimes i feel like a one trick pony!!!!!!!!

Vonni

The AIA is as it says an Annual Investment Allowance - ie. allowable each year you either use it or loose it - eg. you buy qualifying capital items in the year 6th April - 5th April (for sole traders) and 100% is allowable up to a maximum of £50k, you don't carry forward the unused balance. However, if you say purchase £75k worth of qualifying capital items you allow £50k as AIA with the balance being put into the general pool and written down at 20% pa.

The Revenue website has all the relevant information so log on and have a look at the worked examples.

clearaccounting100

def agree year end 31st March much easier than overlap! Just one point motor vehicles WDA is 20% per year as they cannot be included under AIA.

DOTTY

Thank You All

Thanks for all your help everyone. I now have a clear path in front of me. If i get stuck is it ok to come back and ask your advice.