If you are a sole trader, or a partner, reporting your profits could be more complicated this year due to the basis period reform. How can a new online tool help?
For 2023/24, basis period reform will start to kick in – meaning unincorporated businesses that have a different accounting period to the tax year must report profits from the end of the previous accounting date in 2022/2023 up to 5 April 2024 (or 31 March), with the additional profit (after overlap relief) being “transitional” profit. Due to the change, the transitional profit will be automatically spread over five tax years.
HMRC has now launched an online calculator to help you work out the transitional profit, to enable you to complete the tax return correctly. Although the deadline to submit your tax return seems to be a long way off, it may be better to run the calculations sooner rather than later in case the transitional profit has a bigger impact on your tax bill than you are expecting.
If you are unsure of what your overlap relief figure is, contact HMRC to request it. As there are a backlog of requests it would again be sensible to request this figure sooner rather than later to avoid potential delays closer to the filing deadline.
How Churchgates Can Help
Managing your tax reporting as a sole trader or partner under the new basis period reform can be challenging. Churchgates’ team of experts can guide you through using HMRC’s new online calculator to accurately determine your transitional profit and ensure you complete your tax return correctly. Arrange a free initial meeting with us to get tailored advice and support, helping you navigate these changes smoothly and avoid unexpected tax liabilities.
