Tax year basis reform: Should I change my year-end?

In the first blog of this series on tax year basis reforms, we will be discussing the new rules that will affect how unincorporated businesses are taxed from 2023/24.

The move away from the “current year” basis to a “tax year” basis is part of the Government’s wider intent to implement a digital tax system.

Whilst the changes are not due to come into effect until 6 April 2024 (the tax year 2024/25),  businesses need to be clear on what these changes mean.

The tax year 2023/24 is a transitional year and as such unincorporated businesses should start reviewing the effects of this reform now.

Are there practical impacts of this reform?

Whilst the longer-term effects cannot be quantified at the moment, in the short term there will be an overall impact on a business’s cash flow.

This is particularly true for firms that do not make their accounts up to 31 March or 5 April.

Why? Because in the transitional year 2023/24 partners could see the amount of tax they pay on a larger amount of profit increase significantly.

Should I change my year-end?

Businesses are being encouraged to consider changing their year-end.

If your accounting date isn’t 31 March, it could be beneficial to change this ahead of the change to a “tax year” basis. This can either be done in 2022/23 or the upcoming 2023/24 transition period.

Changing your year-end to reflect the upcoming reform before it is implemented could set you and your business in good stead for the 2024/25 tax year and beyond, but you should seek advice beforehand.

The next blog in this series covers how these changes will affect you and your business.

Should you need any advice on how these rules could affect you or your business please contact us.

Business right caret

Small business confidence dips ahead of new customs controls coming into force

Four in 10 exporters have reported a fall in international sales since the end of the Brexit transition period, a major study has revealed. According to the tracker, four in 10 – around 41 per cent of traders – have reported a “drop off” in international sales in the three months to September 2021.


Large number of businesses looking to recruit more staff

It is perhaps a sign of confidence returning to the UK economy that a significant number of British businesses believe they will be recruiting staff over the coming year.


Spring Statement 2022 summary

Mr Sunak found himself addressing MPs against a background of crisis, with the residual impact of COVID, the invasion of Ukraine and the cost-of-living crisis all affecting the economy in different ways.


Compliance right caret

HMRC asks sole traders to correctly report SEISS grants or “repay in full”

Sole traders who have not correctly reported their Self Employment Income Support Scheme (SEISS) grants may be forced to repay them in full, it has been warned.


Making Tax Digital – what you need to know ahead of 2022-23

From April 2022 all VAT-registered businesses need to comply with MTD for VAT. MTD applies to taxpayers who file Income Tax Self Assessments for business or property income of more than £10,000


Real-time online sanctions tracker to assist importers and exporters

Any business involved in international trade, whether importing, exporting or part of the supply chain supply to those firms, is faced with a rapidly changing regulatory environment.


Economy right caret

Small businesses call for Government support to tackle climate change

According to new research, many are addressing energy usage, increasing recycling and investing in microgeneration, but only a third of those have a formal plan to tackle climate change within their business.


Hospitality bosses develop new strategies to cope with staff shortages

Hospitality business owners have responded positively to the staff shortages caused by the pandemic, by increasing wages and implementing improved staff retention strategies.


Everything you need to know about the new WTO Services Domestic Regulation

New World Trade Organisation (WTO) rules are set to cut the cost of global trade by billions of pounds every year, it has been announced.


Tax Planning right caret

Almost 800,000 tax scams reported to HMRC in past 12 months, figures reveal

Nearly 800,000 tax-related scams were reported to HM Revenue & Customs (HMRC) in the past 12 months, a major study has revealed. According to the report, HMRC responded to 797,010 referrals of suspicious contact from the public in the last year. Around 358,000 of these involved scams where taxpayers were offered bogus tax rebates.

Tax Planning

Be aware of tax liabilities if you are using cryptocurrencies

For those who have dabbled in the market, its important for them to understand that there may be tax liabilities with Captial Gains Tax and Income Tax, with any transactions whether with currency or other crypto assets.

Tax Planning

Did you use a Bounce Back Loan to cover personal expenses during the pandemic? Act now to avoid tax consequences

If you received a Bounce Back Loan (BBL) during the coronavirus pandemic and took the cash as drawings, there may be additional tax consequences.

Tax Planning