HMRC have recently announced that they will implement reforms to the basis period (BPR) from 6 April 2023. 

Basis Period Reforms (BPR) is a measure that changes the way trading income is allocated to tax years for the self-employed (sole traders) and partnerships, that do not use an accounting period end date between 31 March to 5 April. It aims to create a simpler, fairer, and more transparent set of rules for the taxation of businesses.

It also affects a small number of businesses with accounting periods between 31 March to 5 April, if they have unused overlap relief (generated where profits have been taxed twice due to a basis period straddling 05 April in earlier years) from previous periods.

Who is affected?

The table below summarises who is affected. For more information and HMRC guidance, click here.

Company

• Self-employed and partnerships with a 5 April accounting year-end.
• Self-employed and partnerships with an accounting year-end between 31 March and 4 April.
• Self-employed and partnerships with an accounting period which does not end between 31 March and 5 April.

Not affected by BPR

• Not affected by BPR unless you have unused overlap relief (**) (see note below).
• Accounting year-end will be treated as 5 April for BPR but may be affected by BPR if you have unused overlap relief.
• BPR will affect the way you calculate your taxable profits and prepare your tax returns for the 2023/24 tax year onwards.

How Jerroms will support you

Please rest assured that we are identifying any clients that will be affected by this reform. We will be in touch in the coming months to advise of the actions needed and the likely impact of those actions.

In the meantime, if you have any queries, please do not hesitate to get in touch with your usual Jerroms contact.