Key points
- The transitional year (2023-24) will comprise a standard part and a transition part.
- The exact steps to take when calculating the profits for 2023-24 are set out in FA 2022 Sch 1 para 70.
- Transitional profits can be spread over five years depending on overlap profits.
- The usual income tax calculation in ITA 2007 s 23 is adapted to treat the amount of any transition profits as a separate component of total income.
- Taxpayers should not be brought into the high income child benefit charge as a result of the new rules.
Last year I wrote an article ‘Shaking the foundations’ (Taxation 2 December 2021 page 12) which gave an overview of the upcoming changes to the basis period rules that are due to take effect from April 2023. Since then these changes have passed into law in Finance Act 2022 and some...