Changes to reporting income from self employment and partnerships
How to report profit on your Self Assessment tax return from 2023 to 2024 if your accounting year does not end on or between 31 March to 5 April.
This guidance will explain what the new tax year basis is and how it may affect you.
You could be affected by the new tax year basis (also known as Basis Period Reform) if both of the following apply:
- you are self employed or in a trading partnership
- your business accounting year end does not match the tax year (is not on or between 31 March and 5 April)
If either of these do not apply, you will not need to do anything differently. You will not be affected if you are an employee or company director.
If you are affected, you will need to change the way you complete your Self Assessment tax return from the 2023 to 2024 tax year.
You can prepare accounts to any date in the year, but you may find it easier to prepare your accounts to 31 March or 5 April from 2024 onwards. This may make completing your tax return simpler as you will not need to use 2 sets of accounts.
Changes to how you report profit
Up to 5 April 2023, the basis period reporting rules applied. This means you reported profits according to your business accounting year end date within the relevant tax year (between 31 March to 5 April the following year).
For example, if your accounting year end date was 31 December 2022, you will have reported profits on your 2022 to 2023 return for the whole year (1 January 2022 to 31 December 2022).
From 6 April 2023, the new tax year basis applies. This means you will need to report profit up to the tax year end, even if your accounting year ends at a different time.
If your accounting year end is not on or between 31 March to 5 April, your profits may need to be apportioned between accounting periods.
Apportionment is the way you work out your profits for a tax year by splitting profits from more than one set of accounts.
Report profit for 2023 to 2024
The 2023 to 2024 tax year is known as the ‘transition year’.
In your Self Assessment tax return, you will need to report profit from the day after your accounting year end in 2022 to 2023, up to 5 April 2024.
This means you:
- will report profits covering more than one year
- may need to apportion 2 sets of accounts to estimate your profits for the year
For example, if you have an accounting year end date of 31 December 2022, you will report profit from 1 January 2023 to 5 April 2024 in the 2023 to 2024 tax year.
If your business accounting year ends on or between 31 March to 4 April, you can treat your accounting year as if it ends on 5 April. This means you can report those profits without apportioning for the 5 days after 31 March.
If you report profit covering more than 12 months, the excess is known as ‘transition profit’. This can be reduced by Overlap Relief and any remaining profit will be spread over the following years, up to the tax year 2027 to 2028.
You will need to complete the following steps.
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Include your overall transition profit and Overlap Relief in your 2023 to 2024 Self Assessment tax return.
Report profit from 6 April 2024
You need to report the profits you earned during the tax year the return relates to (6 April to the following 5 April).
If you have an accounting year end date that is between 31 March and 5 April, put the figures from these accounts in your return as normal.
If not, you need to report parts of the profit from 2 sets of accounts. This means adding together profit from:
- 6 April up to your business account year end date
- the start of your new business year to 5 April the following year
For example, if you have an accounting year end date of 31 December, you will report profit from both:
- 6 April 2024 to 31 December 2024
- 1 January 2025 to 5 April 2025
The normal method of apportioning profits is by looking at the number of days in each of the periods in the tax year.
You can use another method if it is reasonable, and you use it consistently. For example, you can apportion by months or weeks.
When a tax year end falls in a leap year, you should use 366 rather than 365 when working out your taxable profit.
Example of how to apportion by days
A business starts trading on 1 October 2025. It prepares accounts for:
- 1 October 2025 to 30 September 2026, showing profit of £45,000
- 1 October 2026 to 30 September 2027, showing profit of £75,000
If the business apportions these accounts using the number of days in each of the tax years, then the taxable profits will be worked out as follows:
For 2025 to 2026
Taking into account profit from 1 October 2025 to 5 April 2026:
Profit (£45,000) × the number of days in this period (187) ÷ the number of days in the tax year (365).
This equals a taxable profit of £23,054 for 2025 to 2026.
For 2026 to 2027
The profits are worked out in 2 parts.
Taking into account profit from 6 April 2026 to 30 September 2026 (the first part of the tax year):
Profit (£45,000) × the number of days in this period (178) ÷ the number of days in the tax year (365).
This equals a taxable profit of £21,945 for this period.
Taking into account profit from 1 October 2026 to 5 April 2027 (the second part of the tax year):
Profit (£75,000) × the number of days in this period (187) ÷ the number of days in the tax year (365).
This equals a taxable profit of £38,425 for this period.
£21,945 + £38,425 = £60,370
This is the total taxable profit for 2026 to 2027.
Example of how to apportion by months
A business starts trading on 1 January 2026. It prepares accounts for:
- 1 January 2026 to 31 December 2026, showing profit of £50,000
- 1 January 2027 to 31 December 2027, showing profit of £15,000
If the business chooses to apportion these accounts using the number of months in each of the tax years, then the taxable profits will be worked out as follows:
For 2025 to 2026
Taking into account profit from 1 January 2026 to 5 April 2026:
Profit (£50,000) × the number of months in this period (3) ÷ the number of months in the tax year (12).
This equals a taxable profit of £12,500 for 2025 to 2026.
For 2026 to 2027
Taking into account profit from 6 April 2026 to 31 December 2026:
Profit (£50,000) × the number of months in this period (9) ÷ the number of months in the tax year (12).
This equals a taxable profit of £37,500 for this period.
Taking into account profit from 1 January 2027 to 5 April 2027:
Profit (£15,000) × the number of months in this period (3) ÷ the number of months in the tax year (12).
This equals a taxable profit of £3,750 for this period.
£37,500 + £3,750 = £41,250
This is the total taxable profit for 2026 to 2027.
If you do not know your profit for the whole tax year when you file your return
Sometimes you will not know what your profit will be for the whole tax year. This may be because your business accounts for the second part of the tax year are not finalised when you need to complete your return.
If this is the case, you must estimate the profit and provide ‘provisional figures’ on your return. You will then need to amend your return when you know the correct figures.
Find out more about what to do if you do not know your profit for the whole tax year.
Updates to this page
Last updated 11 September 2023 + show all updates
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Link added to get your overlap relief figure.
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First published.