Accounting Period (UK Taxation) - Basic Rules

Basic Rules

An accounting period begins when:

  • the company comes within the charge to corporation tax. A company usually first comes within the corporation tax charge when it first acquires a source of income. However, it will also come within the charge if it commences business but is not already within the charge. Overseas companies usually come within the charge if they become UK resident or start trading in the UK through a UK permanent establishment;
  • an accounting period of the company ends, and the company is still within the charge to corporation tax; or
  • the company does not currently have an accounting period and has a chargeable gain or allowable loss. Chargeable gains and allowable losses are taxable gains and tax relievable losses that arise on the disposal of certain capital assets, for example on the disposal of the company's head office.

An accounting period ends on the earliest of the following:

  • the expiration of 12 months from the beginning of the accounting period;
  • an accounting date of the company or, if there is a period for which the company does not draw up accounts, the end of that period;
  • the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all trades carried on by it, within the charge to corporation tax;
  • the company beginning or ceasing to be UK resident;
  • the company ceasing to be within the charge to corporation tax.

There are further rules to deal with windings up, life assurance companies and lessor companies.

A UK-resident company is treated as coming within the charge to corporation tax (if it has not already come within the charge to corporation tax) when it commences to carry on business.

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