Sole traders and partnerships who do not currently have a 31st March year end will see a change in their reporting period to meet HMRC's new rules for reporting profits based on the tax year and not their accounting year. This will take effect from 5 April 2024.
Accounts for 2023/24 will transition to this new reporting period by extending the period they report on. For example a business with a December 2023 year end will have to report profits for January to December 2023 plus January to March 2024 - a 15 month period.
The profits for this 15 month period will be reported on the tax return for 2023/24 which will need to be submitted by 31 January 2025. This will make a significant difference to the tax payments due for individuals and business owners and partners.
Profits for April 2024 to March 2025 will need to be reported by 31 January 2026.
Sole traders and partners may not have to change their normal accounting date but it may make preparing annual tax returns easier if they do. And if a change is made in 2023 the business may be able to have a shorter accounting period to declare on the tax return rather than one that is in excess of 12 months. This will help to spread the tax payment.
