Lee Sharpe looks at another ‘simplification’ – this time to taxing the basis periods of unincorporated trading businesses being introduced to benefit…whom, exactly?
Basis period reform has been grumbling along for several years. Largely untouched since the transition to the current year (CY) basis of assessment in the mid-1990s, most agents found the rules quite simple.
From commencement under the CY basis on or after 6 April 1994, or from transition (for older businesses) in 1996/97:
- a business was assessed, in a tax year, on a period of up to 12 months’ duration (longer periods could arise but would then typically be ‘reduced’ by ‘overlap relief’; see below);
- periods of assessment might overlap; but
- doing so would create overlap relief, to the extent of the duplication, to be claimed on change of basis
