Basis period reform

The government has reformed the income tax basis period system for unincorporated businesses so that it will be on a tax year basis. The amendments are included within the FA 2022 and are brought in for 2024/25 with a transition year in 2023/24 (all references in this article are to FA 2022 unless otherwise stated). This is different to the current year basis in force at the moment which uses the general rule that a basis period for a tax year is the 12 months ending with the accounting date in that tax year together with additional rules for the opening and closing years of a business and when there is a change in the accounting period end. The operation of the current rules in the early years of a business can create overlapping basis periods...