Accounting year change tax implications

[Cow_calver]

Good afternoon i have been trying to work out roughly my current tax situation, due to rule changes in the Uk my accounting year is set to end at the end of march now every year having previously ended in july

Last accounting meeting he said july 22 right through to the end of march 24 would all be taxed as one year

I tried to phone accountant yesterday but couldnt get thru, im looking at a 2nd hand piece of machinery currently and wondering does the annual investment allowance for machinery cover this whole 20 month period of is is seperated annually i.e. 12 months then 8 months seperate allowances

Thanks

 

[Cow_calver]

Also im applying for a mortgage soon so i dont want this item of machinery being offset against only 8 months as it will impact my taxable profit too much if that makes sense, but over 20 months it would be less of an issue

 

[Cow_calver]

.

 

[Pan mixer]

Isn't the limit for AIA 1 million?

It wouldn't worry me if I had to have a 10 year tax year with that amount

Much more pertinent would be the tax threshold for drawings and 'profit'

 

[David1968]

I have a 22 month accounting period to bring things into line. I, rather naively, assumed the personal allowances would be adjusted accordingly. But no, I only found out recently it's only the same personal allowance as a normal 12 month period

Fortunately, the way things are just now, it's not the issue it could've been...

 

[onesiedale]

you can of course elect to continue with your accounting year as it always has been.
Just tell your accountant. We have stayed on 31st Dec y/e . No complication.

 

[Still Farming]

you can of course elect to continue with your accounting year as it always has been.
Just tell your accountant. We have stayed on 31st Dec y/e . No complication.

HMRC rules and MTD Self assessments rules comes in

 

[onesiedale]

HMRC rules and MTD Self assessments rules comes in

maybe so, but we have still retained our 31st Dec. y/e

 

[Poorbuthappy]

I have a 22 month accounting period to bring things into line. I, rather naively, assumed the personal allowances would be adjusted accordingly. But no, I only found out recently it's only the same personal allowance as a normal 12 month period

Fortunately, the way things are just now, it's not the issue it could've been...

How has the government got away with this? Not working it out pro rata seems so unfair. And just bad accounting tbh.

 

[Flat 10]

I have a 22 month accounting period to bring things into line. I, rather naively, assumed the personal allowances would be adjusted accordingly. But no, I only found out recently it's only the same personal allowance as a normal 12 month period

Fortunately, the way things are just now, it's not the issue it could've been...

But you can spread the extra profit from those extra months over the next few years? I started a thread on this whole subject recently.

 

[David1968]

But you can spread the extra profit from those extra months over the next few years? I started a thread on this whole subject recently.

Yes, I know. But I'm still losing £10k worth of personal allowance somewhere along the line.

 

[David1968]

maybe so, but we have still retained our 31st Dec. y/e

Yes, but your tax accounts will be 9 months from one year and 3 months from the next.

Just complicates things imo.

 

[Adeptandy]

We’ve just done a 15 month year on 1 of the businesses to align and it reduced the potential tax bill considerably compared to what it would have been for the normal 12 months

 

[onesiedale]

Yes, but your tax accounts will be 9 months from one year and 3 months from the next.

Just complicates things imo.

no. our tax accounts are in line with our trading year as they always have been.

 

[David1968]

no. our tax accounts are in line with our trading year as they always have been.

Depends how your business is set up, maybe? I'm only talking about sole traders and partnerships.

 

[onesiedale]

Depends how your business is set up, maybe? I'm only talking about sole traders and partnerships.

we are just a partnership like so many family businesses.

 

[David1968]

we are just a partnership like so many family businesses.

Ok, we clearly have different understanding of how it's going to work.

 

[onesiedale]

All I'm saying is that it's not impossible to continue with a year end that suits your business. Our accountant put the process in place for HMRC to be aware of it and completed relevant 'derrogations' . Clearly, it's not what HMRC want.
For us as a spring calving dairy, 31/12 is when our business is truly dormant for the winter period and the most logical time to end our accounting period.
If it is important to your business and not just a 1 off accounting anomaly that is inconvenient because of an excessive profit (or loss) then your accountant should be able to work for you to put the best system in place. I'm sure that behind the scenes there are things that our accountant has done that I don't fully understand, but in
in simple terms, our business remains simple. We don't use a big specialist firm, just a local practice in a mid-wales market town.
Talk it through with your accountant.