Basis Period Reform Calculator 2023/24–2024/25
Calculate your transitional profit for 2023/24 and 2024/25 under HMRC's basis period reform. See overlap relief and spreading relief.
Basis Period Reform — Transitional Profit Calculator
Frequently Asked Questions
What is the basis period reform?
From 2024/25, HMRC changed the rules so all self-employed people and partners are taxed on profits arising in the tax year (6 April–5 April), not their accounting year. The transitional year was 2023/24.
Who does basis period reform affect?
Sole traders and partners whose accounting year-end is not 31 March or 5 April. If your year-end is 31 December, for example, you'll have extra transitional profit to declare.
What is overlap relief?
When you first started trading, you may have been taxed twice on some profits (overlap profits). Basis period reform lets you use these carried-forward overlap profits to reduce your transitional profit.
What is spreading relief?
HMRC allows you to spread the additional transitional profit over 5 tax years (2023/24 to 2027/28) equally. This reduces the spike in your tax bill in any single year.
Should I change my accounting year?
Many businesses moved their year-end to 31 March or 5 April to align with the tax year and simplify calculations going forward. Seek accountant advice as changing your year-end has other implications.
What if I have no overlap profits?
If you started trading on a 5 April year-end, you likely have no overlap profits. Your transitional profit is the additional months of profit from the period April 2023 to your year-end date in 2023.
When must I report transitional profit?
In your 2023/24 self assessment tax return (deadline: 31 January 2025 for online filing). Penalties apply for late filing.
Does basis period reform affect limited companies?
No. Only sole traders and business partnerships (not incorporated businesses) are affected.
Can I opt to take all transitional profit in 2023/24?
Yes, you can choose to include all the transitional profit in 2023/24 rather than spreading. This could be beneficial if your income will be higher in later years.
What records do I need?
You'll need to know your overlap profits (from your earliest years of trading), your profit for the normal accounting year, and profits for any additional transitional months.
Where can I find my overlap profits?
They should be on your previous SA302 tax calculations or your accountant's records. HMRC may have a record if you filed self assessment in your early trading years.
Is this a new tax?
No — it's a timing change, not a new tax. You will pay tax on the same total profits over your lifetime, just the timing shifts. The transitional year may cause a temporary spike.