top of page
CMTbannerV2.gif

New HMRC online tool launches to help sole traders with tax year reporting changes

Updated: Apr 9


Image credit: HMRC

In response to the latest Basis Period Reform, a new interactive tool has been launched on GOV.UK today, designed to assist sole traders in adapting to new end-of-tax-year profit reporting requirements.


The initiative targets approximately 530,000 individuals, encompassing 280,000 sole traders plus 250,000 partners in partnerships and LLPs, guiding them through the updated reporting framework. Notably, limited companies will not be affected by these updates.


From this tax year onwards, affected businesses must report their profits up to the end of the tax year. This change requires adjustments for those whose accounting year differs from the tax year. The upcoming Self Assessment due on 31 January 2025 will mark the first application of this new rule.

Described as a 'transition year', 2023-24 introduces specific calculations for Basis Period Reform, which the new tool will directly support. Sole traders will continue to have access to existing online forms for overlap relief, a measure designed to prevent double taxation during the transition.


Additional resources, including detailed guidance and calculation aids for determining profits, are available on the HMRC website. For those reporting outside the standard 31 March or 5 April dates, the reform might necessitate declaring over 12 months of profits for 2023-24, potentially increasing their tax liability.

To mitigate such effects, HMRC has provided provisions to spread transition profits and apply overlap relief over the following five tax years, concluding in 2027-28.


Businesses are encouraged to prepare early by securing their overlap relief figures, calculating their transition profits, and ensuring these are accurately reflected in their upcoming tax returns. Further assistance is offered via HMRC’s YouTube channel and additional information on GOV.UK.

Comments


Subscribe to our newsletter. Receive all the latest news

Thanks for subscribing!

thumbnail_phonto (1).jpg
bottom of page