Sole trader ― accounting period end planning

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

This guidance note considers some of the planning points in relation to the accounting period end. This includes:

•
planning work prior to the year end
•
considerations in finalising the accounts

Trading expenses

Prior to the end of the year, it may be possible to consider the timing of significant items of income or expenditure. There are two potential advantages in bringing expenditure forward into an earlier tax year:

•
tax relief is received at the earliest opportunity
•
relief may be received at a higher rate

These are essentially two different points, but they should be considered at the same time.

It is difficult to accurately predict profits a year in advance, but it may be possible to estimate which rate the taxpayer will fall in. In some cases, there may be specific reasons for a change, eg the turnover may be increasing, or the taxpayer may be winding down the business.

In order to effectively advise a trader whether to bring forward expenditure, the marginal rates of tax and national insurance

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