The short version: Your basis period is the 12 month window you use to calculate your taxable profit. For most people, it’s simply the tax year: 6th April to 5th April.
Can I choose a different one?
You can. Some businesses use 1st April to 31st March (close enough to the tax year that it rarely causes issues). Others pick their own dates, like 1st January to 31st December.
Should I bother?
Probably not. Custom basis periods can lead to overlap, where some profits get taxed twice in your early years. You can claim that back later through overlap relief, but it adds complexity you don’t need.
Unless you’ve got a specific reason (aligning with a business partner’s accounts, for instance), stick with the standard tax year.
What changed recently?
The government has been simplifying basis period rules as part of Making Tax Digital. The direction of travel is everyone aligning with the tax year anyway.
Confused about which period to use? Ask us and we’ll help you decide.
