Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Readers’ forum: Mitigating tax on incorporation

02 January 2024
Issue: 4918 / Categories: Forum & Feedback , Capital Gains
Sole trader

Our client is a sole trader with an April year end. If the sole trader does nothing in the 2023-24 transition period they would be taxed on the normal 12 months of profits to 30 April 2023 plus the 11 months of profits to 5 April 2024.

After deducting for overlap profits any additional profits can be spread over five years starting with 2023-24. However the sole trader is considering incorporating on 1 December 2023. Based on our understanding of the rules – as the sole trade is ceasing the calculation of profits in 2023-24 follows the old closing year rules which would mean profits from the normal 12 months to 30 April 2023 plus the seven months to 30 November 2023 are taxed (after overlap profits) but with no spreading. This therefore has a significant impact on the trader’s tax hit in the...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon