The changes affect the tax reporting for self-employed individuals, partners, trusts and estates with trading income. They involve aligning the tax ‘year-end’ of affected businesses with the fiscal year, taxing them on profits within a fiscal tax year regardless of the accounting period.
Due to be implemented in the 2024/25 tax year, with 2023/24 as a transitional year, the taxable period therefore runs from the start of their basis period in 2022/23 to 31 March 2024.
In some cases businesses may initially find they need to add additional months into the following year’s profits and will potentially face taxation on up to 23 months’ profit in one year, with an option to spread the accelerated tax over five years.
See our previous article, Potential changes to basis periods’ rules.
If you think your business will be affected by the changes, please get in touch with us.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary.
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