Basis period reform ― frequently asked questions

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

The following is a summary of frequently asked questions relating to the basis period reform which has a start date of the tax year 2024/25 with a transitional period in 2023/24. For details on how the basis period reforms will work and the method of transition, see the Tax year basis from 2024/25 onwards and Basis period transitional rules 2023/24 guidance notes.

For a client factsheet and a checklist that summarises the implications for businesses, see the Client factsheet ― basis period reform and Checklist ― basis period reform implications for businesses.

Does a business have to change its accounting year end to match the tax year?

No, a business can maintain an accounting year which does not match the tax year but for the purposes of completing their tax return, the business will need to apportion profits or losses to tax years. This should be done by reference to the number of days in the periods but other methods including using weeks or months can be used if they are reasonable and used

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