Accounting periods

In this lesson

1. 0:00 Accounting periods and taxable profit
2. 0:32 Corporation tax rates and financial years
3. 1:07 When accounting periods start and end
4. 1:47 Worked example: Chester Limited accounting periods

About this lesson

You'll explore three key concepts: taxable total profit (TTP), which is the income and chargeable gains less qualifying charitable donations; periods of account, which are the periods for which companies prepare financial statements (maximum 18 months); and accounting periods for tax purposes, which are the periods used to calculate TTP (maximum 12 months). Understanding the distinction between these is crucial because they determine when tax is due and how much. The lesson walks you through when accounting periods start and end. A period begins on the earliest of: commencement of trading, acquisition of a source of income, or immediately after a previous accounting period ends. It ends on the earliest of: cessation of trading, the end of the financial reporting period, or 12 months from the start. You'll work through a practical example with Chester Limited to see how these rules apply in real scenarios, including how to handle short periods when the financial year end falls before the 12-month tax period is complete. By mastering accounting periods, you'll be able to correctly structure corporation tax computations and avoid common timing errors in your TX assessments.

Duration: 3m