For self-employed individuals or those who are a member of a trading partnership, we wish to remind you that a basis period reform is being implemented by HMRC and this will impact you if you have an accounting year which is not 31 March or 5 April.
Historically, all sole traders and partners have been taxed on profits which are made in the accounting period ending in the tax year, subject to special rules in the opening years of business.
From 2024/25, all sole traders/partners will be taxed on profits made during the tax year, i.e. the year to 5 April, irrespective of when their accounting period ends.
To move from one basis to the other, the 2023/24 tax year will be a transitional year and all sole traders/partners who do not have a 31 March or 5 April year end will be taxed on the profits for the accounting period which ends in the tax year, as normal, plus profits for the extended period to 5 April 2024. There is the facility to spread the additional profits which occur due to this adjustment to ease cash flow.
We will be reaching out to those clients who are affected over the coming weeks to help them consider the impact of the reform.
The next step
For more information, please contact Joe Stuart on j.stuart@uhy-manchester.com, or your usual UHY adviser.
