Sarah Bradford explains how the basis period rules work for the 2023/24 transitional year.
Despite the delay to the introduction of making tax digital for income tax self-assessment (MTD for ITSA) which will now apply to unincorporated businesses and landlords with trading or rental income of at least £50,000 from April 2026, the associated reform of the basis period rules is to go ahead as planned.
As a result of the reforms, unincorporated businesses will be taxed on profits of the tax year from 2024/25 onwards. To move from the current year basis (under which the profits taxed for a tax year are those for the accounting period ending in that tax year) to the tax year basis, the 2023/24 tax year will be a transitional year.
Profits taxed in 2023/24
Where an unincorporated business does not prepare accounts to 31 March or 5 April (or a date in
