Richard Curtis provides an overview of the new basis of assessment for trading income.
Having been in existence since the introduction of self-assessment, the ‘current year basis’ of assessment is being replaced by a new ‘tax year basis’. HMRC states that the aim “is to simplify the system before Making Tax Digital is implemented”.
Under the new tax year basis of assessment (see FA 2022, Sch 1), which will apply from 2024/25 and for 2023/24 for businesses starting in that year, the income tax and Class 4 National Insurance contributions liabilities of self-employed individuals and partners will be calculated by reference to the profits of the tax year, regardless of the accounting year. Those preparing accounts to 5 April are, of course, already doing this. And to simplify matters, those preparing accounts to 31 March will also be treated as equating to the tax year, as will accounts prepared to a
