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Basis period 1st year rule

This topic has 1 reply, 2 voices, and was last updated 2 years ago by JillyB.

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September 8, 2022 at 1:05 am #665677
Abdulrahman5
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In Basis period, for example if a trader commence trading on 1st sept 20×1 and prepared his account to 31st dec 20×1 the same year . Which is 4 months ( i.e the length of the Accounting period) .how the to solve it using the first year rule ? If he has trading profits for ex.
Period to 31st dec 20×1. £ 10000
Year ended 31st dec 20×2. £ 30000
Year ended 31st dec 20×3. £ 40000
September 8, 2022 at 1:20 pm #665753
JillyB
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In the first year of trade ie x1/x2 he wll be taxed on an actual basis – what he actually earned in the period from commencement to the next 5th April. 7 months profits. These profits will be taken from the first and second set of financial accounts.
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