Sarah Bradford outlines the move to the tax year basis and highlights the limited window for claiming relief for overlap profits.
From 6 April 2024, the self-employed will be taxed on their profits for the tax year (the ‘tax year basis’).
For 2022/23 and earlier tax years, the profits that were taxed for a tax year were (once the business was established) those for the accounting period ending in the tax year (the ‘current year basis’). To move from the current year basis to the tax year basis, the 2023/24 tax year is a transition year. It is also the last opportunity to claim relief for overlap profits.
The legislation reforming the basis period rules was introduced by FA 2022, s 7 and Sch 1, amending ITTOIA 2005.
The tax year basis
Under the tax year basis, the self-employed (including sole traders and individual
