Will your first tax bill put you out of business?

In recent years, failure to budget for payment of that first tax bill has put more sole traders out of business than any other single cause. If you make a profit, you will have to pay tax and it could well be for a lot more than you think so please don’t be in denial about this!
Self assessment runs on a current year basis, meaning that you pay tax on profits made in your accounting year which ends during the tax year, the so called basis period. The exception to this is the first few years of trading when special opening and early years rules apply. However, if you choose a year end to coincide with the tax year, ie 5/4 (or a day or two either side) or 31/3, then current year basis applies right from the off.

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