HMRC has issued guidance on changes to the basis period tax year, affecting how certain businesses report their income.
The basis period reform, active from 6 April 2023, affects partnerships, self-employed individuals and sole traders whose accounting year does not end on or between 31 March and 5 April.
HMRC said:
“If either of these do not apply, you will not need to do anything differently. You will not be affected if you are an employee or company director.
“If you are affected, you will need to change the way you complete your self-assessment tax return from the 2023 to 2024 tax year.”
The 2023/24 tax year is a transition year, in which affected businesses will have to report profits covering more than one year, and may need to allocate two sets of accounts to estimate the profits for the year.
Jon Stride, vice chair of the ATT technical steering group, said that businesses without a 31 March or 5 April year-end could “also experience ongoing additional administrative burdens unless they change their year-end going forwards.”
“If they don’t change their accounting date, they will have extra work to do each time they complete a tax return, because they will need to combine the amounts from two separate sets of accounts,” he added.
To avoid these “ongoing administrative burdens”, Stride recommended businesses change their accounting date to 31 March or 5 April.
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