Basis Period Reform

HMRC are changing the basis period of sole traders, partnerships and LLP’s. What does this mean for you? If a trading entity has accounts drawn up for a 12 month period – June to May 2019 then those profits would be taxed in the tax year it ended – i.e 2019-2020. 

This reform will simplify processes for accountants and HMRC and also align those individuals and organisations that will be affected by MTD (making tax digital) for income tax which is coming into force April 2024. 

In summary, this measure will only affect businesses which draw up annual accounts to a date different to 31 March or 5 April (mainly seasonal businesses and large partnerships), and businesses that commence from 6 April 2024.

Find out more here.