Basis period reform

Finance Act 2022 reforms the income tax basis period system for unincorporated businesses. From 2024/25 the profits of the tax year will be the profits arising in that tax year with accounting period profits being apportioned by the number of days or another reasonable basis. There will be a transition year of 2023/24 which will bridge the period between the end of the basis period for 2022/23 and the start of the reformed basis period in 2024/25. In the transition year of 2023/24 all overlap relief brought forward must be used and in subsequent years no further overlap relief can be created. Any additional profits arising for the business under the new rules will be spread over five tax years starting in 2023/24 with an option to elect to accelerate the tax charge. Trading and property businesses can treat an accounting date between 31 March and 4 April...