HMRC changes profit assessment rules.

HMRC is changing the way it assesses profits for some businesses from 6 April 2024 onwards. Sole traders and partnerships will be assessed on their profits for each tax year that runs from 6 April to 5 April.

Businesses with an accounting period between 6 April and 30 March will see a change in how they complete their tax returns, while companies and those with an accounting date between 6 March and 30 April will remain unaffected.

HMRC will assess these businesses on the profits for the usual 12-month period, as well as the rest of the 2023/24 tax year. This may affect the amount of tax payable for some, making them eligible for overlap relief.

Taxes on the rest of 2023/24 - minus any overlap relief due - will be spread over the next five tax years. There will be a one-year transition period to allow for this.

More detailed HMRC guidance on the changes will be published following a review.

While sole traders and partnerships will not need to change their accounting period, HMRC said:

"You may want to consider changing your accounting date to 31 March or 5 April. If you do, this will align your accounting period with the end of the tax year, and you will not need to apportion profits on your tax return every year."

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