Basis Period

The basis period is the calendrical period of 12 months upon which a sole trader calculates their tax each year. You calculate both your income and expenditures during this 12 month period and if you are self-employed, you can choose your own basis period.

You can choose your own basis period from any of the following:

  • The standard tax year of 6th April – 5th April
  • 1st April – 31st March
  • A custom start and end date like 1st January – 31st December

It is important to note, however, that using a custom period can complicate your accounting and runs the risk of you being overtaxed and having to later make a claim. As not every basis period will overlap 100% with the standard tax year, it’s best to only use a custom basis period if absolutely necessary. If you do need to later claim any duplicated tax, you can claim Overlap Relief via HMRC. This isn’t overly complicated, but it can add an additional layer of hassle and complexity that isn’t necessary. We recommend starting your business and running your accounts in line with the standard tax year of 6th April to 5th April.

Frequently Asked Questions

Search More Terms

View our latest news & insights

14 February 2024
Navigating the landscape of business taxes in the UK can seem daunting, especially given the range of taxes that might a...
Navigating the landscape of business taxes in the UK can seem daunting, especially given the range of taxes that might apply to your organization. However, understanding which taxes are relevant to your business is crucial for com...
17 January 2024
Your business has costs to deal with and pay as part of their day-to-day trade and as part of ad hoc strategies. They ty...
Your business has costs to deal with and pay as part of their day-to-day trade and as part of ad hoc strategies. They typically range from phone line bills, postage and stationery to computer software and travel costs. Being the o...