Basis Period Reform Calculator
Calculate your transitional profits and understand how basis period reform affects your self-employed or partnership income. Plan for the move to tax year basis.
Old Rules (Before 2024/25)
Businesses taxed on profits of accounting period ending in the tax year. A 30 April 2023 year end was taxed in 2023/24.
New Rules (2024/25 Onwards)
All businesses taxed on profits arising 6 April to 5 April. Profits apportioned if accounting period differs from tax year.
Key Dates
- • 2023/24: Transition year - transitional profits calculated
- • 2024/25: First year on tax year basis
- • 2027/28: Last year of 5-year spreading period
- • April 2026: MTD for Income Tax mandatory (£50k+)
What is basis period reform?
Basis period reform changes how self-employed businesses and partnerships are taxed. From 2024/25, businesses are taxed on profits arising in the tax year (6 April to 5 April), not their accounting period. This aligns with Making Tax Digital requirements.
When did basis period reform take effect?
The transition year was 2023/24. From 2024/25 onwards, all unincorporated businesses are taxed on the tax year basis. Businesses with accounting year ends not aligned to 31 March or 5 April will have transitional profits.
What are transitional profits?
Transitional profits arise in 2023/24 when moving from the old basis period rules to the new tax year basis. These are the additional profits brought into charge due to the change. They can be spread over 5 years to ease the tax burden.
Can I spread my transitional profits?
Yes, transitional profits can be spread equally over 5 tax years (2023/24 to 2027/28) unless you elect to accelerate them. This spreading reduces the immediate tax impact of the reform.
How does this affect my accounting year end?
You can keep any accounting year end, but you'll need to apportion profits to the tax year. Many businesses are choosing to change their year end to 31 March or 5 April to simplify reporting under Making Tax Digital.
Need Professional Help?
Basis period reform can be complex. Consider consulting an accountant for personalised advice.