ACCA Applied Skills · Taxation (UK) · Income from self-employment
Ravi started trading as a sole trader on 1 July 2025 and prepared his first accounts for the 9 months to 31 March 2026. His adjusted trading profit for this period is £27,000. What is his trading profit assessable for 2025-26, the tax year of commencement?
The 2025-26 assessment is £27,000. In the tax year of commencement, profits are assessed from the start date to 5 April. Since the whole nine-month period from 1 July 2025 to 31 March 2026 falls in that tax year, all £27,000 is assessed.
- A£27,000Correct
- B£36,000
- C£20,250
- D£9,000
Explanation
In the first tax year the assessment is the actual profits from the start date to the following 5 April. Ravi's first accounts end on 31 March 2026, which falls within 2025-26, so the whole £27,000 for 1 July 2025 to 31 March 2026 is assessed in 2025-26. Time-apportioning to 12 months (£36,000) or taking 9/12 of £27,000 are wrong.
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