Key points
- The rules dictating when the trading profits of unincorporated businesses are subject to income tax will be changing from April 2023.
- The current basis period rules will be abolished from April 2024 and replaced with a tax year basis of assessment.
- Tax year 2023-24 will act as a ‘transitional year’ when we switch from the current rules to this new basis of assessment.
- The changes will make little difference to businesses already drawing up accounts to 31 March or 5 April but will be significant for those that do not.
- The tax profession should start preparing clients for the change.
From April 2023 we will see a fundamental shake up of the rules dictating when the trading profits of unincorporated businesses are subject to income tax. Under legislation included in clause 7 and Sch 1 of Finance (No 2) Bill 2021 the current...