Unincorporated businesses

Business profits are charged to income tax and Class 4 NICs on the current year basis. This means that the profits ‘taxed’ for each tax year (ending 5 April) are those earned in the accounting period ending in the tax year.

Case Study 1

Mary, a sole trader, draws up her accounts to 31 July each year. Her profits for the year ended 31 July 2010 will normally be taxed in 2010/11.
There are special rules for the early and final years of a business, and for partnership joiners and leavers. There is a growing number of ‘fines’ for those not complying with the rules and regulations of Government departments. We have already mentioned income tax and Class 2 NICs, but other ‘traps’ to avoid are:

• Late VAT registration
• Late filing penalties
• Late payment surcharges and interest
• Penalties for errors in returns
• Penalties for failing to operate a PAYE or sub-contractors scheme

If we are to help you to steer clear of these traps, you must let us have all the details for your accounts and Tax Returns in good time, and inform us of any changes in your business, financial and personal circumstances.


Give us a ring today 0845258 1445