(1). Where a trader’s monthly profits are falling it may be beneficial to choose a 31 March year end. With a 31 March year end:
For example, in Nora’s second tax year, 2019/20:
(2). 31 May year end
1. Profit for each trading period
£ | |
---|---|
Nine months ending 31 May 2019 (£4,000 x 2) + (£3,000 x 5) + (£6,000 x 2) | 35,000 |
Year ending 31 May 2020 (£6,000 x 4) + (£10,000 x 8) | 104,000 |
2. Taxable profit for the first two tax years
£ | |
---|---|
2018/19 (1 September 2018 to 5 April 2019) 7/9 x £35,000 | 27,222 |
2019/20 (1 September 2018 to 31 August 2019) £35,000 + (3/12 x £104,000) | 61,000 |