Upcoming changes and who this impacts
If you are self-employed or in a partnership, you may be affected by the upcoming change in how your taxable profits are calculated. The basis period reform will require that from 6 April 2024, all individuals who are self-employed and in partnership will need to report their profits to 31st March or 5th April each year. In theory, this will simplify and align the taxation of trading income with other forms of income for individuals going forward.
The reform will affect you if you are a sole trader or an individual in partnership and your accounting year end is not 31 March or 5 April. It does not affect companies.
What you need to do
This means that you may need to prepare your accounts for the 2023/24 tax year earlier. You may also face a cash flow impact as you may have to pay tax on more profits in the transitional year 2023/24. Speak to our tax department so that we can help you plan ahead, anticipate how this will affect future tax payments and see if there are any planning opportunities available to mitigate the impact on you.
To help you prepare for the change, you should consider using an online accounting software such as Xero, which can make your accounting easy and save you time. Xero can connect to your bank feed, automate your invoicing and billing, and give you real-time insights into your finances. This may help where accounts need to be prepared sooner.
How We Can Help
At Pierce, we have a dedicated team specialising in online accounting services who can help you choose the best software for your business. We can also offer you training and support to make the transition smooth and hassle-free. We can also advise you on how to manage the impact of the reform on your cash flow and tax planning.
If you want to find out more about the basis period reform and how it affects you or would like assistance with online accounting, please contact us today. We are here to help you grow your business and achieve your goals.