HMRC is changing the way it assesses profits for some businesses from 6 April 2024 onwards. Sole traders and partnerships will be assessed on their profits for each tax year that runs from 6 April to 5 April.
Businesses with an accounting period between 6 April and 30 March will see a change in how they complete their tax returns, while companies and those with an accounting date between 6 March and 30 April will remain unaffected.
HMRC will assess these businesses on the profits for the usual 12-month period, as well as the rest of the 2023/24 tax year. This may affect the amount of tax payable for some, making them eligible for overlap relief.
Taxes on the rest of 2023/24 - minus any overlap relief due - will be spread over the next five tax years. There will be a one-year transition period to allow for this.
More detailed HMRC guidance on the changes will be published following a review.
While sole traders and partnerships will not need to change their accounting period, HMRC said:
"You may want to consider changing your accounting date to 31 March or 5 April. If you do, this will align your accounting period with the end of the tax year, and you will not need to apportion profits on your tax return every year."
Talk to us about your tax return.
