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The basics of basis period reform: Part 2
Key points
- The transitional rules will be highly examinable in the examinations in 2024.
- For the purposes of calculating how much is actually taxed in 2023-24 we have to identify the basis periods for 2022-23 and 2024-25 the profits in the ‘gap’ between the two must be taxed at some point.
- We could choose to tax all of these untaxed profits in the transitional year but this is considered unfair as it would mean accelerating when profits are taxed: HMRC has therefore created rules to mitigate this effect.
- We need to consider what happens when we have trading losses.
In the first of my two articles on basis period reform aimed at students who are sitting their examinations in 2024 we looked at the rules that would apply to the trading profits of existing sole traders and partners from tax year 2024-25 how a new sole trader...
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