The government has confirmed plans to reform the basis period rules which determine how trading income for self-employed sole traders and partnerships is allocated to tax years. The proposal is to change the allocation so that it will be based on the profits or losses arising in the actual tax year rather than in accordance with the accounting period ending in the tax year.
The new tax year basis will apply from the tax year 2024-25 in anticipation of the start of making tax digital for income tax self assessment in April 2024 with a transition to the new regime in the tax year 2023-24. The measure will affect businesses that draw up annual accounts to a date other than 31 March or 5 April.
Pete Miller chair of the CIOT’s owner managed business committee said: ‘This change will mean that...
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