(E)xempt Supplies, Year End, Zero Rated Supplies
Not really X! X is really tricky!!! See the A-Z blog: E is for… for information on exempt supplies.
This the end of the period for which your accountant will draw up your accounts and usually this period is a year, hence year end.
Companies have their year ends set by Companies House and it is based on the month the company is incorporated. For example, a company incorporated in August will be set up with a 31 August year end. The shareholders can change the year end if they wish to and once the resolution has been passed formal notification must be sent to Companies House.
For the self-employed, you can choose your year end and this may be 31 March or 5 April to agree to the income tax year but it need not be. If your profits are growing you would be better with an accounting year end of 30 April. Remember for the self-employed, once your business has been up and running for a few years your tax is based on the accounting year end that ends in the tax year. So using 30 April as your year end will mean that the profits for that year will be taxed a year later than the profits for an accounting year end of 5 April. If your profits are growing you will get a cashflow benefit of paying tax on increasing profits later.
Zero rated supplies
A category of sales for VAT. Sales that fall to be zero rated have no VAT on the sales price but for the business, all purchase VAT can be reclaimed on the quarterly VAT return. Most human and animal feedstuffs fall to be zero rated and so farmers will not charge VAT on their food/meat sold but can recover the VAT on purchases such as fencing, troughs etc.
Other zero rated supplies include some health and welfare items, education and utilities.