I had an enquiry from a NASGP member recently about the tax effect of stopping self employment. This principle affects both locum and partners in a similar way – and the problem arises when accounts are not prepared to 31st March or 5th April.
In times of rising profits (and traditionally until recent years, profits have tended to increase if only by inflation on a year by year basis) having an accounts year end early in the tax year will tend to defer tax. Thus historically many locums would have been advised to have 30th April year ends.
For the older readers among you – prior to 1996 we had the ‘preceding year basis’ so that profits for the year to, say, 30 June 1994 wouldn’t have been taxed until 1995-96. This gave all sorts of advantages so that you could create high profit periods that dropped out of account altogether on a cessation.