The general rule is that the profits for a tax year are those
arising in the period of 12 months ending with the accounting date
in that year.
Different rules apply:
The general rule is that the accounting date is the date in the
tax year to which the trader’s accounts are drawn up.
Where accounts are drawn up to two or more dates in the same tax year, the accounting date is the latest of those dates.
Special rules apply where there are slight variations in accounting date each year, see BIM71030.
This table summarises the normal basis period rules which apply where accounts are regularly made up to the same date each year. It shows that there are no gaps between basis periods for any tax years, but there may be overlaps.
|Year 1||Date of commencement to 5 April in Year 1 (or to earlier date of cessation)|
|Year 2 (in which there is no cessation)|
|- where accounting date in Year 2 is less than 12 months after commencement||12 months from date of commencement|
|- where accounting date in Year 2 is 12 months or more after commencement||12 months to accounting date ending in Year 2|
|- where no accounting date in Year 2||12 months ending on 5 April in Year 2|
|Year 3 onwards (in which there is no cessation)||12 months to accounting date ending in tax year (or 12 months to 5 April if accounts not drawn up to a date in Year 3 and there has been no change of accounting date)|
|Year of cessation (in Year 2 onwards)||From date immediately after end of basis period for previous year to date of cessation|
A trader starts trading on 1 October 2008, prepares their first accounts to 31 December 2009, and annually to 31 December until they cease trading on 30 April 2012. The trader’s basis periods are:
|2008-2009||Year 1||1 October 2008 to 5 April 2009|
|2009-2010||Year 2||12 months to 31 December 2009|
|2010-2011||Year 3||12 months to 31 December 2010|
|2011-2012||Year 4||12 months to 31 December 2011|
|2012-2013||Cessation||1 January 2012 to 30 April 2012|