Basis Period Reform

Base period reform, which is the switch to a new tax year basis accounting reporting period, from April 2024, if you are a sole trader, partnership business, or self-employed, you may need to report your profits on a new tax year basis.

You need to declare profits from the end of the previous accounting period 2022-2023 to April 5, 2024. Any additional profits, after overlap relief, will be treated as transitional profits and will be spread equally over the next five years, including 2023 to 2024. We have seen a significant increase in requests for HMRC overlapping relief data, and the authorities are currently not responding as quickly as we would like. It is likely that the backlog of requests is being cleared, and it is expected that it will take some time to clear the current backlog. If you have not done overlap relief before and are awaiting processing for the coming year, you should prepare as early as possible to avoid the heavy lifting and processing/waiting times.

We have also received a number of inquiries regarding how partnerships reflect base period changes in their self-assessment reports. For example, is an accounting period ending on March 31st considered equivalent to an accounting period ending on April 5th? This is a significant change that most taxpayers, non-accountants and non-professionals may find difficult to understand and Follow it correctly without confusion. The guidelines can be complex and it’s easy to make mistakes if you don’t understand the details. Please contact your accountant to ensure a smooth transition for you and your business reporting.

This is a very important update and we hope you may find this note helpful to you ! If you have any other questions, feel free to let me know.

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