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Mar 2026
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Basis of Assessment Reforms
Forthcoming ‘basis of assessment’ reforms will change the way trading income is allocated to tax years for the self-employed. The changes will affect sole traders and partnerships that use an accounting date between 6 April and 30 March. There is no change to the rule for companies.
The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’. Under the current rules there can be overlapping basis periods, which charge tax on profits twice and generate corresponding ‘overlap relief’ which is usually given on cessation of the business. The new method of using a ‘tax year basis’ will remove the basis period rules and prevents the creation of further overlap relief.
The new rules will come into effect in the 2024-25 tax year with 2023-24 being a transitional year. During the transitional year, all businesses’ basis periods will be aligned to the tax year and all outstanding overlap relief can be used against profits for that tax year.
Affected businesses in 2023-24 will be assessed on the tax for profits for the:
- 12-month accounting period they have previously been using; and
- for the rest of the 2023-24 tax year – minus any overlap relief that may be due – spread over the next 5 tax years.
The changes do not affect sole traders and partnerships who already draw up annual accounts to a date between 31 March and 5 April.
Affected businesses should ensure they are prepared for the changes as there may be cashflow implications.
Upcoming Basis of Assessment Reforms
With the introduction of basis period reform, many businesses and partnerships will experience changes to how profits are calculated and when tax liabilities become payable. Working with experienced tax accountants in London can help reduce uncertainty and manage cash‑flow pressures during the transition. At CIGMA Accounting, we support Technology Companies, Recruitment Agencies, and Professional Services businesses, helping clients navigate transitional year calculations, overlap relief adjustments, and Self‑Assessment planning with confidence.
Our local accountants in London work with clients through our offices in Farringdon and Canary Wharf, as well as nearby areas including Moorgate, Liverpool Street, Isle of Dogs, and Poplar. Clients are welcome to visit our offices across London to discuss basis period reform, future tax liabilities, and practical planning strategies ahead of upcoming changes.
For official HMRC guidance on construction‑related tax obligations and compliance requirements, you can also refer to GOV.UK:
If you are looking for proactive accountants near you to help prepare for basis of assessment reform and Self‑Assessment changes, our team can provide clear, forward‑looking advice tailored to your business.
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