Unincorporated Businesses- Tax Year Basis

The tax year basis applies from 2024/25 onwards. This means that if you run an unincorporated business, you will be taxed on the profits for the tax year, regardless of the date to which you prepare your accounts. If your accounting date is not 31 March, 5 April or a day in between, you will need to apportion the profits of two accounting periods to arrive at your profit for the tax year. You will need to report your 2024/25 profits on the tax year basis on your 2024/25 Self Assessment tax return.

The 2023/24 tax year was a transitional year between the end of the current year basis and the start of the tax year basis. Transition profits arose if your accounting period did not correspond with the tax year. These are the profits for the period from the end of the accounting period ending in 2023/24 to 5 April 2024. Unless an election is made otherwise, these profits are assessed in equal instalments over the five years from 2023/24 to 2027/28.

You can elect to bring forward some or all of the remaining transition profits to the 2024/25 tax year where this is beneficial.

We can help you calculate your 2024/25 profits on a tax-year basis and also advise whether an election to advance any transition profits would be worthwhile.