Basis period reform and averaging
A new ATT technical article explores how income tax basis period reform will interact with the averaging rules for farmers and creative artists.
From April 2024, the existing basis period rules for income tax (the ‘current year basis’) will be abolished and replaced with a tax year basis of assessment. Under the tax year basis, businesses will be subject to income tax on their profits arising in the tax year, regardless of their accounting period end. Tax year 2023/24 will act as a transitional year, in which we switch over from the current year basis to the new tax year basis.
The ATT has been engaging further with HMRC on how these changes will interact with the averaging rules. Following this engagement we have prepared a technical article which includes two worked examples.
If you have any further questions or comments on these examples, or basis period reform more widely, please contact ATT Technical Officer Emma Rawson.