Richard Curtis summarises the change in the basis of income tax assessment for self-employed individuals.
An individual carrying on a trade, profession or vocation (either alone or in partnership) is subject to income tax (and Class 4 National Insurance contributions) on their profits but can prepare accounts to any date they choose, not necessarily to coincide with the tax year ending on 5 April.
Until 2022/23, the general rule for determining the profit or loss for the tax year was by reference to the accounts for the year ending in the tax year. Special rules applied for the opening and closing tax years. However, the rules have been reformed from 2024/25 and the basis period for an unincorporated business is now the relevant profits and losses arising within the tax year itself (6 April to 5 April). If the business’s accounting year differs from the tax year (or from the year to 31 March), the results must be
