HMRC have issued new guidance on calculating transition profit for 2023/24, for taxpayers affected by the move to the new tax year basis.
The guidance covers the following:
identifying the ‘standard’ and ‘transition’ parts of the basis period (HMRC give the example of preparing accounts to 31 December each year, with the standard part running from 1 January to 31 December 2023 and the transition part from 1 January to 5 April 2024);
apportioning profits to those parts (HMRC again give examples of how to report profits from multiple sets of accounts, where the business’s accounting year does not align with the tax year);
deducting overlap relief; and
working out how much transition profit after overlap relief should be taxed in 2023/24, with the remainder spread over the following four tax years. HMRC intends to publish a new calculator tool in April 2024 which will help work out transition profit and other figures for 2023/24 returns.
HMRC have issued new guidance on calculating transition profit for 2023/24, for taxpayers affected by the move to the new tax year basis.
The guidance covers the following:
identifying the ‘standard’ and ‘transition’ parts of the basis period (HMRC give the example of preparing accounts to 31 December each year, with the standard part running from 1 January to 31 December 2023 and the transition part from 1 January to 5 April 2024);
apportioning profits to those parts (HMRC again give examples of how to report profits from multiple sets of accounts, where the business’s accounting year does not align with the tax year);
deducting overlap relief; and
working out how much transition profit after overlap relief should be taxed in 2023/24, with the remainder spread over the following four tax years. HMRC intends to publish a new calculator tool in April 2024 which will help work out transition profit and other figures for 2023/24 returns.
