If you're a sole trader, or a partner, reporting your profits could be more complicated this year due to the basis period reform. How can a new online tool help?
For 2023/24, basis period reform will start to kick in - meaning unincorporated businesses that have a different accounting period to the tax year must report profits from the end of the previous accounting date in 2022/23 up to 5 April 2024 (or 31 March), with the additional profit (after overlap relief) being "transitional" profit. Due to the change, the transitional profit will be automatically spread over five tax years.
HMRC has now launched an online calculator to help you work out the transitional profit, to enable you to complete the tax return correctly. Although the deadline to submit your tax return seems to be a long way off, it may be better to run the calculations sooner rather than later in case the transitional profit has a bigger impact on your tax bill than you are expecting.
If you're unsure of what your overlap relief figure is, contact HMRC to request it. As there's a backlog of requests it would again be sensible to request this figure sooner rather than later to avoid potential delays closer to the filing deadline.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.