The basis of assessment for the second tax year is dependent on the choice of accounting date.

If a person starts trading in one tax year and ceases trading in the next, the basis period for that second year will be the period from 6 April at the start of the second year to the date of cessation of trading. This may be referred to as an ‘actual basis’.

Example

Elton starts trading on 1 February 2019 and ceases trading on 31 May 2019. He makes a profit of £6,000.

Although the period of trading is only for four months, that period spans two tax years and each must be considered.

His basis periods will be as follows:

Year of assessment

Basis period

2018–19

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