Basis period reform – practicalities and pitfalls

Key points

• From 6 April 2024 the existing ‘current year basis’ rules will be abolished and replaced with a ‘tax year basis’ of assessment.
• Businesses can draw their accounts up to whichever date they choose but changing to 31 March or 5 April will remove the administrative burdens of having to apportion profits.
• The only HMRC guidance on basis period reform is in the Business Income Manual at BIM81200 onwards.
• HMRC will be able to provide overlap figures if these were previously reported on a self-assessment return.
• Advisers need to start exploring what the new rules might mean in practice both for their clients and their own internal processes.

With tax year 2023-24 now in full swing major changes to the income tax basis period rules are starting to take effect.

My previous Taxation articles ‘Shaking the foundations’ (2 December 2021) and ‘Complicated transition’ (5...