What is the tax year basis?

From April 2024, self-employed profits are taxed based on the tax year (6 April - 5 April) regardless of your accounting year end.

What were overlap profits?

Under the old rules, some profits were taxed twice when starting a business. These can be relieved during the transition or when you cease trading.

Should I change my accounting year?

If your year end isn't 31 March or 5 April, you'll need to apportion profits. Changing to match the tax year simplifies calculations.

How does Making Tax Digital affect this?

MTD for Income Tax will require quarterly reporting, making alignment with the tax year increasingly important.

What about partnerships?

The same tax year basis applies to partners in a partnership from April 2024.

Self Employment2026/27

What is Basis Period? UK Definition 2026/27

Written by Waqas Sagar ACA, FCCA, FMAAT

•

Verified by ICAEW, ACCA & AAT

•Updated April 2026

Quick Answer

The accounting period used to calculate self-employed profits for tax purposes.

Definition of Basis Period

The basis period determines which accounting period's profits are taxed in which tax year. From April 2024, the UK moved to a tax year basis, aligning business profits with the tax year (6 April - 5 April).

Previously, profits were taxed based on accounting year ends, causing complexity with overlap profits. The new tax year basis simplifies this but may have caused one-off higher tax bills during transition.

Basis Period — Key Facts for 2026/27

New basis	Tax year (6 April - 5 April)
Effective from	April 2024
Transition year	2023/24
Overlap relief	Available for transition

How Basis Period Works — Example

Tax year basis example

1Business year end: 31 December 2026
2Under tax year basis for 2026/27:
3Profits 1 Jan - 5 Apr 2026: Apportioned from 2025 accounts
4Profits 6 Apr - 31 Dec 2026: From 2026 accounts
5Profits 1 Jan - 5 Apr 2027: Estimated/provisional
6All combined for 2026/27 Self Assessment

How Basis Period Affects Your Tax

The tax year basis simplifies tax calculations but requires apportionment if your accounting year doesn't match the tax year. Consider changing your accounting year end to 31 March or 5 April for simplicity.

Official HMRC Guidance on Basis Period

For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.

HMRC: Basis period reform

Frequently Asked Questions about Basis Period

Related Tax Terms

Self Assessment

The system for reporting income and calculating tax owed to HMRC.

Making Tax Digital

HMRC's programme requiring businesses to keep digital records and file online.

Overlap Profits

Profits taxed twice due to accounting year rules - can be deducted on cessation.

Accuracy Note

This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.