The window your accounts cover. For most sole traders it now lines up neatly with the tax year — but it was not always that simple.
Ask three sole traders when their "year" ends and you may get three different answers. The accounting period is one of those quiet pieces of plumbing that rarely gets explained, yet it decides which slice of your profit lands in which tax year — and, since a major 2024 reform, the sensible default has changed for almost everyone working for themselves.
Your business does not measure profit on a rolling daily basis; it measures it over a defined block of time. That block is the accounting period. At its end you total everything you earned and everything you legitimately spent, and the difference is the profit (or loss) you report. Most businesses use a twelve-month period because it captures a full cycle of trade, including any seasonal peaks and troughs.
The accounting date matters because it is the anchor for everything that follows: the profit figure, the expenses you can claim, and the closing position you carry forward. Choose 5 April and your accounts map cleanly onto the tax year. Choose anything else and you create an apportionment job at year end.
The tax year is fixed by statute: 6 April to 5 April. You cannot move it. The accounting period, by contrast, is yours to set. A baker might run accounts to 31 December because it suits stock-taking; a freelancer might run to 5 April because it is simplest.
The two only cause friction when they do not line up. Historically, sole traders were taxed on the accounting period ending in the tax year (the "current year basis"), which produced overlap profits and a confusing first few years of trading. The 2024 basis period reform swept that away.
From 2024/25 onwards, the basis period for sole traders and partnerships is the tax year itself. You are taxed on the profit that arises between 6 April and 5 April, full stop. If your accounts end on any other date, you must time-apportion two sets of accounts to fill the tax year — extra work, and sometimes estimates that have to be corrected later.
Because of this, HMRC and most accountants now recommend a 5 April (or 31 March) accounting date for the self-employed. It removes apportionment entirely.
Priya, a freelance illustrator, draws her accounts up to 5 April 2026. Her accounting period is simply 6 April 2025 to 5 April 2026, and her £38,000 profit is taxed in full in 2025/26. No apportionment, one clean figure.
Now compare Sam, who kept an old 30 June accounting date. For 2025/26 he must blend:
| Period | Days in 2025/26 | Profit | Apportioned to 2025/26 |
|---|---|---|---|
| Year to 30 Jun 2025 | 86 of 365 | £30,000 | £7,068 |
| Year to 30 Jun 2026 | 279 of 365 | £42,000 | £32,104 |
| Taxable profit 2025/26 | £39,172 |
Sam reaches a similar figure, but only after splitting two years of accounts by days — and the second figure may be an estimate he later amends. Priya's single 5 April period avoids all of it. Plan your reporting windows with the quarterly planner.
From April 2026, sole traders and landlords with qualifying income over £50,000 enter Making Tax Digital for Income Tax. You will keep digital records and send a summary of income and expenses to HMRC every quarter, with quarters running 6 April–5 July, 6 July–5 October, and so on. Those quarters sit inside a 6 April to 5 April accounting period, which is yet another reason aligning your accounting date to the tax year is now the path of least resistance.
The accounting period decides which profit belongs to which year. Since 2024, the simplest answer for the self-employed is to make it match the tax year exactly.
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