Basis Period is the timeframe for which a sole trader or partnership calculates their tax. It is a 12 month period and the standard start date is 6th April.
The term Basis Period refers to the timeframe during which a Sole Trader or Partnership has its income and expenses assessed for tax purposes. The amount of tax owed is calculated based on the income earned during this period. A Basis Period is 12 months long.
You can choose any custom Basis Period but the easiest choice is usually 6th April to 5th April of the following year. This is because it overlaps 100% with the normal tax year, which means it is easier to keep track of and not get overtaxed.
The Basis Period can be impacted if there is a change to the accounting period or if someone starts a new business and stops one.
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