![]() ![]() The proposals are now detailed in draft legislation (Finance Bill 2022), and it is hoped there may also be further administrative easements before the changes come into effect. The original proposal was to make this change from 2023/24, but the change has been delayed until 2024/25, with 2023/24 as a transitional year. This will advance tax liabilities for many. The move to this new tax year basis will involve a transitional (catch-up) year for many sole traders and partnerships that do not use 5 April or 31 March as their accounting date. This would align the treatment of trading income with non-trading income. The key reforms involve moving from the ‘current year’ basis to a ‘tax year’ basis, meaning that business profits will be calculated for the tax year rather than for the period of account (ie their accounting year) ending in the tax year. These are designed to alleviate the most unfair impacts of the transitional rules, but the proposals will still accelerate tax charges for many individuals in partnerships. On Thursday 27 January 2022, HMRC and the government responded to feedback from BDO (and others) and announced a number of proposed changes to the way the basis period reform transitional rules will work from April 2024. ![]()
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