Work out your Basis Period Reform transition profit
How to work out your transition profit for the 2023 to 2024 tax year if you are affected by Basis Period Reform.
If you are affected by Basis Period Reform, you will need to change the way you complete your Self Assessment tax return from the 2023 to 2024 tax year.
Find out more about changes to reporting income from self employment and partnerships.
You must file your 2023 to 2024 Self Assessment tax return by the deadline even if you do not know the profits for your whole basis period. If you are waiting for HMRC to provide any information, give ‘provisional figures’ and change your return when you know the correct figures.
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.
If your business accounting year end has always matched the tax year (is on or between 31 March and 5 April) you will not have any transition profit.
Use the calculator to work out your transition profit
If you are self-employed or in a partnership (including a limited liability partnership), you can use the calculator to work out your transition profit and other figures you will need to complete your 2023 to 2024 tax return.
The calculator assumes:
- you are apportioning profits from accounting periods to your basis period by reference to days
- you will set any losses brought forward against your standard profit before your transition profit
- if you are self-employed and claimed trading income allowance, you will set it against your standard profit before your transition profit
You cannot use the calculator if you have 3 or more accounting periods that fall partly or wholly within the period from the end of your 2022 to 2023 basis period to either:
- 5 April 2024
- your accounting date, if it is on or between 31 March and 4 April 2024
If you are in a partnership, the calculator is for trading profits only. Transition profit does not apply to other partnership income.
Find out about more about how to calculate your taxable profits.
Before you start
If you are self-employed, you will need your accounts for any accounting period that falls partly or wholly within the period from the end of your 2022 to 2023 basis period to either:
- 5 April 2024
- your accounting date, if it is on or between 31 March and 4 April 2024
For example, if you currently account to 30 September and you:
- extend your 2023 accounts to end on 31 March 2024, you will need details for the 18-month long accounting period ended 31 March 2024
- shorten your 2024 accounts to end on 31 March 2024, you will need details for the 12-month long accounting period ended 30 September 2023 and the 6-month long accounting period ended 31 March 2024
- do not change your accounting date, you will need details for the 12-month long accounting periods ended 30 September 2023 and 30 September 2024
If you are in a partnership, you will need your Partnership Statement for the 2023 to 2024 tax year.
You may have more than one Partnership Statement from your partnership.
You may also need further information from the partnership if it has an accounting period that begins before 1 April 2024 and ends after 5 April 2024.
You will also need:
- your Overlap Relief figure
- any adjustments you need to make to your net profit or loss to reach your taxable profit or loss for each accounting period, if you are self-employed
- any other adjustments you need to make to your taxable profit for the year
Work out your transition profit manually
You will be taxed in 2023 to 2024 on the profits of the ‘standard part’ and the ‘transition part’ of your basis period.
Standard part
Your standard part is the 12 month period beginning immediately after the end of your basis period for the 2022 to 2023 tax year.
This will normally have been your accounting period in 2022 to 2023. It may be a different date if you recently started your business or became a partner, or changed your accounting date. You will find this information on your 2022 to 2023 tax return.
Transition part
Your transition part begins immediately after the end of the standard part. It ends on 5 April 2024, or on your accounting date in 2023 to 2024 if it is on or between 31 March and 4 April 2024.
For example, if you prepare accounts to 31 December each year your:
- standard part runs from 1 January to 31 December 2023
- transition part runs from 1 January to 5 April 2024
If you extend your 2023 accounts or shorten your 2024 accounts to 31 March 2024 then your transition part runs from 1 January to 31 March 2024.
Apportioning profits to the standard part and the transition part
You need to report the profits you earned in each part of your basis period.
If your accounts match the part exactly you can report the profit as normal.
If not, you need to report parts of the profit from one or more sets of accounts.
For example, if you have an accounting year end date of 31 December and you:
- extend your 2023 accounts to 31 March 2024, you will report profit from the 15-month long accounting period ended 31 March 2024 which covers your standard and transition parts, apportioned between the parts
- shorten your 2024 accounts to 31 March 2024, you will report profit from the 12-month long accounting period ended 31 December 2023 for your standard part and profit from the 3-month long accounting period ended 31 March 2024 for your transition part
- do not change your accounting date, you will report profit from the 12-month long accounting period ended 31 December 2023 for your standard part and part of the profit from the 12-month long accounting period ended 31 December 2024 for your transition part, covering 1 January to 5 April 2024
The normal method of apportioning profits is by looking at the number of days in each of the accounting periods in the parts of the basis period.
You can use another method if it is reasonable, and you use it consistently. For example, you can apportion by months or weeks.
If your accounting period or part of the basis period covers the end of February 2024, remember to include 29 February when working out your taxable profit.
Example of how to apportion by days
A business prepares accounts for:
- 1 October 2022 to 30 September 2023, showing profit of £45,000
- 1 October 2023 to 30 September 2024, showing profit of £75,000
Standard part
Taking into account profit from 1 October 2022 to 30 September 2023, the business has a taxable profit of £45,000 for the standard part.
Transition part
Taking into account profit from 1 October 2023 to 5 April 2024:
Profit (£75,000) × the number of days in the transition part (188) ÷ the number of days in the accounting period (366).
This equals a taxable profit of £38,525 for the transition part.
Example of how to apportion by months
A business prepares accounts for:
- 1 January 2023 to 31 December 2023, showing profit of £50,000
- 1 January 2024 to 31 December 2024, showing profit of £15,000
Standard part
Taking into account profit from 1 January 2023 to 31 December 2023, the business has a taxable profit of £50,000 for the standard part.
Transition part
Taking into account profit from 1 January 2024 to 5 April 2024:
Profit (£15,000) × the number of months in the transition part (3) ÷ the number of months in the accounting period (12).
This equals a taxable profit of £3,750 for the transition part.
If you do not know your profit for your whole basis period when you file your return
You may not know what your profit was for your whole basis period. This may be because your business accounts ending later in 2024 or in 2025 are not finalised when you need to complete your 2023 to 2024 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.
Deduct your Overlap Relief
The profits of the parts are your ‘standard profit’ and your ‘transition profit’. Your standard profit will be taxed as normal. If you have a standard loss this will reduce your transition profit.
You should deduct your Overlap Relief figure from your transition profit. You cannot use Overlap Relief after the 2023 to 2024 tax year.
You may not know your overlap relief figure if you do not have a record of it and we have not been able to provide information by the time you complete your 2023 to 2024 return.
If this is the case, you must estimate the overlap relief and provide ‘provisional figures’ on your return. You will then need to amend your return when you know the correct figures.
Work out how much of your transition profit after Overlap Relief to tax in 2023 to 2024
Your transition profit after Overlap Relief will be spread over 5 years, starting with the 2023 to 2024 tax year and ending with the 2027 to 2028 tax year.
There are boxes on your Self Assessment tax return where you should report:
- your transition profit
- your Overlap Relief
- how much of your transition profit after Overlap Relief should be taxed in 2023 to 2024
At least 20% of your transition profit after Overlap Relief must be taxed in 2023 to 2024. If you want more of your transition profit after Overlap Relief to be taxed in 2023 to 2024, enter the higher amount on your 2023 to 2024 tax return and use the ‘Any other information’ box to explain this.
Your remaining transition profit after Overlap Relief will be spread equally over the remaining 4 years. You should keep a record of this to help you complete your tax returns for later tax years.
If your business ceases on or before 5 April 2027, any transition profit after Overlap Relief that has not yet been taxed must be taxed in the year your business ceased.
If you are a farmer or creative artist, transition profit should not be included when calculating your averaging adjustment.
Updates to this page
Published 19 February 2024Last updated 5 November 2024 + show all updates
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Information added about how to use the calculator to work out your transition profit if you're in a partnership.
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Introduction section updated about when you need to file your 2023 to 2024 Self Assessment tax return. New guidance about being in a partnership also added to the 'Use the calculator to work out your transition profit' section.
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Added background information to explain Basis Period Reform.
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A link to the calculator to help you work out your transition profit has been added.
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First published.