Basis period - help please
JKO
Registered Posts: 1 New contributor 🐸
hello,
Could anyone please explain to me the basis period.... I think i understand all rules, but I keep getting my answers wrong.... Usually, I've got problem with the second year.
example
Mary opened a shop on 1 March 2006 and prepared her first accounts for the 15 mths period to 31 May 2007 and to 31 May thereafter. Her adjusted profits for the first three periods were:
1 March 2006 to 31 May 2007 £30,000
1 June 2007 to 31 May 2008 35,000
1 June 2008 to 31 May 2009 40,000
The answer is:
05/06 01.03.06 - 05.04.06 (30000 x 1/15)= 2000 I understand this bit
06/07 06.04.06 - 05.04.07 (30000 x 12/15)=24000 dont understand that
07/08 01.06.06 - 31.05.07 (30000 x 12/15)=24000 "
08/09 01.06.07 - 31.05.08 35000
09/10 01.06.08 - 31.05.09 40000
Thanks in advance.
Could anyone please explain to me the basis period.... I think i understand all rules, but I keep getting my answers wrong.... Usually, I've got problem with the second year.
example
Mary opened a shop on 1 March 2006 and prepared her first accounts for the 15 mths period to 31 May 2007 and to 31 May thereafter. Her adjusted profits for the first three periods were:
1 March 2006 to 31 May 2007 £30,000
1 June 2007 to 31 May 2008 35,000
1 June 2008 to 31 May 2009 40,000
The answer is:
05/06 01.03.06 - 05.04.06 (30000 x 1/15)= 2000 I understand this bit
06/07 06.04.06 - 05.04.07 (30000 x 12/15)=24000 dont understand that
07/08 01.06.06 - 31.05.07 (30000 x 12/15)=24000 "
08/09 01.06.07 - 31.05.08 35000
09/10 01.06.08 - 31.05.09 40000
Thanks in advance.
0
Comments
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hello,
Could anyone please explain to me the basis period.... I think i understand all rules, but I keep getting my answers wrong.... Usually, I've got problem with the second year.
example
Mary opened a shop on 1 March 2006 and prepared her first accounts for the 15 mths period to 31 May 2007 and to 31 May thereafter. Her adjusted profits for the first three periods were:
1 March 2006 to 31 May 2007 £30,000
1 June 2007 to 31 May 2008 35,000
1 June 2008 to 31 May 2009 40,000
The answer is:
05/06 01.03.06 - 05.04.06 (30000 x 1/15)= 2000 I understand this bit
06/07 06.04.06 - 05.04.07 (30000 x 12/15)=24000 dont understand that
07/08 01.06.06 - 31.05.07 (30000 x 12/15)=24000 "
08/09 01.06.07 - 31.05.08 35000
09/10 01.06.08 - 31.05.09 40000
Thanks in advance.
Does this help?
Year 1
Tax is paid on profits between start of business and end of tax year.
Year 2
Period 12 months or less, ends during year-Tax is paid on profits of first 12 months trading
Period 12 months or more, ends during year-Tax is paid on 12 months profits to the accounting date
No period end during year-Tax is paid on profits of the tax year (12 months)
Year 3-
Tax is paid on profits of the period ending during year 3
Note:After year 1 – tax is paid on 12 month periods each year
This is how I remember it:
Year 1 - the taxman wants his money now!
Year 2 - the tax man wants some money but only 12 months
By Year 3 - you should be working within your accounting period (providing it's 12 months long)0 -
In the case above, the first accounting period crosses over 3 tax years.
If this happens, the first tax year is to the 5/4 as usual.
The basis for the 2nd tax year is the 6th April to 5th April.
The basis for the 3rd tax year is the 12 months leading up to the accounting period in the 3rd tax year.0
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