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Issue:
4955
/
Categories:
Comment & Analysis
, apportion profits
, basis periods
, trading losses
, Business
All at a loss
Key points
- The new tax year basis of assessment took effect on 6 April 2024.
- The treatment of losses in 2023-24 is straightforward but terminal losses are more complicated.
- The requirement to apportion profits from two sets of accounts under the tax year basis means care must be taken not to double count losses when calculating the terminal loss.
- For cessations in 2025-26 and beyond there may also be spread transition profits to take into account.
As of 6 April 2024 trading profits of unincorporated businesses are now assessed on a tax year basis. This ‘basis period reform’ represents a fundamental shake up of the income tax rules and has knock-on effects for many other areas of the tax system. It also has some particularly tricky transitional rules which apply for the tax year 2023-24 and beyond.
My previous articles for Taxation have looked in detail at these...
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