Important Tax Changes - What Unincorporated Businesses Need to Know!

The 2023/24 tax year introduced significant changes for unincorporated businesses with accounting dates other than 5 April or 31 March.  From 6 April 2024, all unincorporated businesses will need to align their taxable profit calculations with the tax year, i.e., from 6 April to 5 April, regardless of their accounting end date.

Key Points to Understand:

1.   New Profit Calculation Method:

Businesses that currently don’t align their accounting date with the tax year (5 April or 31 March) must adjust their profit calculations.

For example, a sole trader or partnership with a 31 December accounting date will calculate their 2024/25 profits as:

• 9/12ths of profits for the year ending 31 December 2024.
• Plus 3/12ths of profits for the year ending 31 December 2025.

This will likely require estimating profits for the latter period and adjusting the return once final figures are available.

 2.   Consider Changing Accounting Dates:

•  To simplify this process and avoid potential estimation errors, an option is to consider changing your accounting date to align with the tax year.
• Our team can advise on the tax implications and assist with the transition.

 3.   Transitional Year Complexities:

• The 2023/24 tax year was a transitional year with complex profit calculation rules.
• Many businesses may face a higher tax bill due on 31 January 2025.
• Early calculation of this impact is crucial for effective cash flow management.

 4.   Immediate Action Required:

•  If your accounts are prepared to a date other than 31 March or 5 April, it's essential to review your situation now.

Don’t delay, contact us on 01942 292500 or info@teamjs.co.uk to discuss how these changes affect your business and to plan accordingly.

We're here to help you navigate these changes and ensure your business remains compliant and tax-efficient.