I started up a sole trader business in August 2015 and will be submitting details on my 2015/16 tax return post-April 2016. As a service provider only, no capital applies and turnover is less than the current VAT threshold. What are the ‘pros’ and ‘cons’ of an accounting end date of 30 March (or should this be 5 April)? What other factors should be considered in selecting any other date?

Firstly, if a business makes up accounts to 31 March, it is treated as being made up to 5 April. An advantage of a 31 March/5 April year end is that no ‘overlap’ profits are created. Overlap profits are brought about by being taxed a second time, in the second year, on profits already taxed. Frequently, profits in a new business are smaller at the beginning, but gradually increase. An advantage of a 30 April year end means that tax is paid later. So for a 30 April 2016 year end, tax is due by 31 January 2018, and the tax on the profits earned between 1 May 2016 and 30 April 2017 is due by 31 January 2019. If the business had a 31 March 2017 year end, the tax on profits earned between 1 April 2016 and 31 March 2017 would be due 31 January 2018.