New interactive tool for transition period profit reporting published
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.
Related Topics
-
Practical guide: Tax-efficient will planning with residential property
An individual has a significant property portfolio which provides them with their sole source of income. They want to gift shares in some property to their daughter but retain the income. Can they do this without triggering the reservation of benefit rules?
-
Will HMRC treat late processed invoices as errors?
Your business processes invoices when they have been approved by budget holders, so some will be processed a month late, delaying your input tax claim. How might HMRC’s updated guidance help here?
-
Are redundancy payments tax deductible?
A seemingly simple question we’re often asked is how much tax relief a business is entitled to for redundancy payments. The answer is that it depends on the situation. How might the circumstances of a redundancy affect the tax deduction?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.