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Reporting profits on a tax year basis for sole trader & partnership businesses

Posted 20/05/2024

All sole trader and partnership businesses must now report their profits on a tax year basis, beginning with the Self Assessment return due by 31 January 2025 (covering the tax year 2023 to 2024) and going forward.

Any business that previously had a different accounting period must declare profits from the end of the previous accounting date in 2022 to 2023 up to 5 April 2024, with the additional profit (after overlap relief) being transitional profit.

The transitional profit will be spread by default over 5 years including 2023 to 2024.

Accounting periods ending on 31 March will now be treated as equivalent to those ending on 5 April.

HMRC have now launched a full package of online interactive guidance to support completion of the return and working out transitional profits for these cases

Where such returns are made for a partnership there are no changes to the partnership return (the SA800). This is because all adjustments for transitional profit and overlap relief are made on the individual partners’ returns.

Profits incurred in the 2023 to 2024 tax year can be reduced by any overlap relief which is entered on the 2023 to 2024 Self Assessment return.

HMRC have provided an online service to ask what the overlap relief figure is according to their records

Further HMRC guidance on Basis Period Reform can be found at

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