Important tax changes in 2023/24
April 30, 2023

Tax changes 2023Tax basis reform: accounting period changes

If you are self-employed or in a trading partnership, there are some important changes taking place in the current tax year if you do not currently use 31 March or 5 April as your accounting date.

The changes affect the move from a ‘current year’ basis to a ‘tax year’ basis. This will result in profits being taxed on those earned in a tax year, rather than in an accounting year, and will come into effect for the 2024/25 tax year.

There is, however, an important transitional period for the 2023/24 tax year, which will take into account the changes required to move from one basis to the other. This is going to be an administrative burden for business owners and their tax advisers, due to the required use of overlap and the calculation of the profits and potential additional tax.

There are provisions for the additional tax to be paid over a five-year period in certain circumstances, with anomalies arising in the tax computations for a number of years.

Making Tax Digital – changes to the way we will report to HMRC

HMRC are making the changes so that the dates align with the introduction of Making Tax Digital (MTD), which is currently set to be introduced from April 2026. Under MTD businesses will be required to send quarterly figures to HMRC, with a catch-up final statement at the end of the tax year when the final profits are known. We will be sharing more information when the position has been confirmed.

In summary, if you have an accounting period of anything other than 31 March or 5 April, please speak to us so that we can guide you through the changes for the 2023/24 tax year.

Chadwicks are specialist tax advisors. If you have any queries we are happy to help. You can email or call us on 0161 370 9600.

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