{"id":10649,"date":"2023-08-25T16:46:24","date_gmt":"2023-08-25T15:46:24","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=10649"},"modified":"2025-12-18T17:53:42","modified_gmt":"2025-12-18T17:53:42","slug":"basis-period-reform-making-tax-digital-accountants","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/basis-period-reform-making-tax-digital-accountants\/","title":{"rendered":"Basis period reform and Making Tax Digital: How accountants can help their clients"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tBasis period reform and Making Tax Digital: How accountants can help their clients\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2023-08-25T16:46:24+01:00\">25 August, 2023<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Basis period reform and Making Tax Digital: How accountants can help their clients\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/basis-period-reform-making-tax-digital-accountants\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/asavinwattanajantra\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2026\/03\/Asavin-350x350.jpg\" class=\"entry-author__image\" alt=\"Asavin\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2026\/03\/Asavin-350x350.jpg 350w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2026\/03\/Asavin-768x768.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2026\/03\/Asavin-810x810.jpg 810w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2026\/03\/Asavin.jpg 1000w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Asavin Wattanajantra<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n\n\n<p>HMRC has announced basis period reforms.<\/p>\n\n\n\n<p>These are mandatory for unincorporated businesses, such as <a href=\"https:\/\/www.sage.com\/en-gb\/making-tax-digital\/sole-trader\/\" target=\"_blank\" rel=\"noreferrer noopener\">sole traders<\/a>\u2014even if they are not affected by <a href=\"https:\/\/www.sage.com\/en-gb\/making-tax-digital\/accountants\/\" target=\"_blank\" rel=\"noreferrer noopener\">Making Tax Digital<\/a>.<\/p>\n\n\n\n<p>Let&#8217;s take a look at the details and how you can roll this out among your clients.<\/p>\n\n\n\n<p>Here&#8217;s what we cover:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"#what-anchor-link\">What is basis period reform?<\/a><\/li>\n\n\n\n<li><a href=\"#are-anchor-link\">What are the dates of the basis period reform?<\/a><\/li>\n\n\n\n<li><a href=\"#basis-anchor-link\">What basis period reform looks like for a business owner<\/a><\/li>\n\n\n\n<li><a href=\"#if-anchor-link\">What if a sole trader can&#8217;t adjust for basis period reform?<\/a><\/li>\n\n\n\n<li><a href=\"#period-anchor-link\">Basis period reform: What accountants should do now<\/a><\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"#gate-0fffa372-27da-4c83-b370-078e6c62e153\">Download &#8220;The accountant&#8217;s guide to Making Tax Digital for Income Tax&#8221; here<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-anchor-link\">What is basis period reform?<\/h2>\n\n\n\n<p>The reform is straightforward in principle.<\/p>\n\n\n\n<p>As of the 2024\/25 tax year, all affected businesses must use the tax year as their basis period. They will only be liable for profits arising in, <span class=\"TextRun Highlight SCXW189907324 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW189907324 BCX0\">or apportioned to,<\/span><\/span> that and subsequent tax years. Overlap profits will no longer exist <span class=\"NormalTextRun SCXW189907324 BCX0\">after a transition period<\/span>.<\/p>\n\n\n\n<p>Most sole traders already use the tax year as both their accounting and basis period, of course, so these changes will not affect them. But those that have different accounting periods\u2014such as 1 January to 31 December\u2014will have 2023\/24 as a transition period.<\/p>\n\n\n\n<p>In other words, and only for those businesses with accounting periods that don&#8217;t match the tax year, this particular basis period will be longer than 12 months.<\/p>\n\n\n\n<p>Because this is likely to create larger tax bills, HMRC will be offering transitional relief.<\/p>\n\n\n\n<p>You can <span class=\"TextRun Highlight SCXW22310574 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW22310574 BCX0\">spread <\/span><span class=\"NormalTextRun SCXW22310574 BCX0\">the profits of<\/span><span class=\"NormalTextRun SCXW22310574 BCX0\"> this final period<\/span><\/span> (e.g. 3 months for a business with an accounting date of 30 September) proportionally across the following 5 years (or paid more quickly, if desired).<\/p>\n\n\n\n<p>Although influenced by the introduction of <a title=\"MTD for Income Tax Self Assessment: What accountants and clients need to do\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/mtd-for-income-tax-accountants-need-to-know\/\">Making Tax Digital for Income Tax<\/a>, basis period reform is a separate <span class=\"TextRun Highlight SCXW265384136 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW265384136 BCX0\">provision<\/span><\/span>.<\/p>\n\n\n\n<p>It will affect all unincorporated businesses\u2014even those unaffected by MTD for Income Tax.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"are-anchor-link\">What are the dates of the basis period reform?<\/h2>\n\n\n\n<p>This is how it looks running up to 2024\/25, which is the first year for which the reforms are mandatory:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>2022\/23:<\/strong> Last year of the existing basis period rules.<\/li>\n\n\n\n<li><strong>2023\/24:<\/strong> Transitional year. This is when businesses will have to move to the new fiscal year basis and, if not using the tax year as the basis period, will generate transitional taxable profits after their accounting period <span class=\"NormalTextRun SCXW195252604 BCX0\">ends<\/span><span class=\"NormalTextRun SCXW195252604 BCX0\"> in the tax year<\/span><span class=\"NormalTextRun SCXW195252604 BCX0\">.<\/span> For most businesses, this will could mean drawing up 2 sets of accounts: One up to the end of the existing <span class=\"TextRun Highlight SCXW195252604 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW195252604 BCX0\">accounting<\/span><span class=\"NormalTextRun SCXW195252604 BCX0\"> period<\/span><span class=\"NormalTextRun SCXW195252604 BCX0\">&#8211;<\/span><span class=\"NormalTextRun SCXW195252604 BCX0\">end<\/span><\/span> and transitional accounts drawn up to 5 April 2024. Alternatively, accounts can continue to be drawn up for a full 12+ month period <span class=\"TextRun Highlight SCXW226546194 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW226546194 BCX0\">to the existing accounting period end date<\/span><span class=\"NormalTextRun SCXW226546194 BCX0\">.<\/span><\/span><span class=\"EOP SCXW226546194 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/li>\n\n\n\n<li><strong>2024\/25:<\/strong> The first year of the new basis. From this point on, businesses will only be taxed on profits earned in, <span class=\"TextRun Highlight SCXW140246113 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW140246113 BCX0\"> or apportioned to, <\/span><\/span>the tax year.<\/li>\n<\/ul>\n\n\n\n<p>HMRC has said an equivalence provision applies which is to say, 31 March 2024, 1 April 2024, 2 April 2024, 3 April 2024 and 4 April 2024 are all treated as if they&#8217;re 5 April. <span class=\"TextRun Highlight SCXW53575814 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW53575814 BCX0\">There is <\/span><span class=\"NormalTextRun SCXW53575814 BCX0\">an option<\/span><span class=\"NormalTextRun SCXW53575814 BCX0\"> for a taxpayer to opt out of these rules if <\/span><span class=\"NormalTextRun SCXW53575814 BCX0\">required<\/span><span class=\"NormalTextRun SCXW53575814 BCX0\">.<\/span><\/span><span class=\"EOP SCXW53575814 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p>In other words, any extra days after 31 March are treated as if they&#8217;re in the following tax year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"basis-anchor-link\">What basis period reform looks like for a business owner<\/h2>\n\n\n\n<p>John Smith runs a <a title=\"Trade secrets to building a plumbing side hustle\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/sound-advice-plumbing-side-hustle-rob-abrahams\/\">plumbing business<\/a> as a sole trader.<\/p>\n\n\n\n<p>It was established in September 2015, and John decided he would run his accounting period from that date, meaning he generated 6 months of overlap profits at that point.<\/p>\n\n\n\n<p>When it comes to basis period reform, John has 2 options:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Carry on using his existing accounting period<\/li>\n\n\n\n<li>Use the opportunity to switch his accounting period to the tax year so his basis and accounting period match.<\/li>\n<\/ul>\n\n\n\n<p><span class=\"TextRun Highlight SCXW162513272 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW162513272 BCX0\">For 2023\/24<\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">, John <\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">inc<\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">l<\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">ude<\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">s<\/span><span class=\"NormalTextRun SCXW162513272 BCX0\"> profits from<\/span><span class=\"NormalTextRun SCXW162513272 BCX0\"> his accounting period <\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">ending 30 September 2024 <\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">in the return for <\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">the <\/span><span class=\"NormalTextRun SCXW162513272 BCX0\">tax year.<\/span><\/span><span class=\"EOP SCXW162513272 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p><span class=\"TextRun Highlight SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW159928424 BCX0\">He will apportion his p<\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">rofits for<\/span><\/span><span class=\"TextRun SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"> <span class=\"NormalTextRun SCXW159928424 BCX0\">the <\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">accounting year ending 30 September 202<\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">4<\/span> <\/span><span class=\"TextRun Highlight SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW159928424 BCX0\">which<\/span><\/span><span class=\"TextRun SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"> <span class=\"NormalTextRun SCXW159928424 BCX0\">will mean he has an <\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">additional<\/span> <\/span><span class=\"TextRun Highlight SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW159928424 BCX0\">6<\/span><\/span><span class=\"TextRun SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW159928424 BCX0\"> months <\/span><\/span><span class=\"TextRun Highlight SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW159928424 BCX0\">of <\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">\u201c<\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">transitional period<\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">\u201d<\/span> <span class=\"NormalTextRun SCXW159928424 BCX0\">profit<\/span><span class=\"NormalTextRun SCXW159928424 BCX0\">s<\/span><\/span><span class=\"TextRun SCXW159928424 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW159928424 BCX0\"> in the basis period for that year.<\/span><\/span><span class=\"EOP SCXW159928424 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p>However, John also has overlap profits from when he established his business, which must be deducted <span class=\"NormalTextRun SCXW62679129 BCX0\">from transitional period<\/span><span class=\"NormalTextRun SCXW62679129 BCX0\"> profits<\/span><span class=\"NormalTextRun SCXW62679129 BCX0\">.<\/span><\/p>\n\n\n\n<p>What&#8217;s left is referred to as the transitional amount.<\/p>\n\n\n\n<p>John then has the option of proportionally <span class=\"TextRun Highlight SCXW96063475 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW96063475 BCX0\">spreading<\/span><\/span> the transitional amount over the following 5 years. Alternatively, he can include the whole amount <span data-contrast=\"auto\">in 2023\/24<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-contrast=\"auto\">HMRC is adjusting its online web forms to include an application to see the information it holds about overlap profits This has recently been launched, alternatively you can fill out a form and apply by post.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"#gate-0fffa372-27da-4c83-b370-078e6c62e153\">Download &#8220;The accountant&#8217;s guide to Making Tax Digital for Income Tax&#8221; here<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"if-anchor-link\">What if a sole trader can&#8217;t adjust for basis period reform?<\/h2>\n\n\n\n<p><span class=\"TextRun SCXW289491 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW289491 BCX0\">There\u2019s <\/span><\/span><span class=\"TextRun Highlight SCXW289491 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW289491 BCX0\">little<\/span> <span class=\"NormalTextRun SCXW289491 BCX0\">current official advice for those with reasons not to<\/span><\/span><span class=\"TextRun SCXW289491 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW289491 BCX0\"> adjust accounting periods for the basis period reforms.<\/span><\/span><span class=\"EOP SCXW289491 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p>Indeed, for many clients, such as farmers or seasonal businesses such as tourism, it might be unviable to do so.<\/p>\n\n\n\n<p><span class=\"TextRun Highlight SCXW76471398 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun CommentHighlightRest SCXW76471398 BCX0\">For<\/span><\/span> <span class=\"TextRun Highlight SCXW76471398 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun CommentHighlightRest SCXW76471398 BCX0\">all<\/span><\/span><span class=\"TextRun SCXW76471398 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun CommentHighlightRest SCXW76471398 BCX0\"> t<\/span><span class=\"NormalTextRun CommentHighlightPipeRest SCXW76471398 BCX0\">hose that will find themselves adopting Making Tax Digital as of April 2026 or April 2027, having asynchronous accounting and basis periods could present issues.<\/span><\/span><span class=\"EOP SCXW76471398 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p><span class=\"TextRun Highlight SCXW251316638 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun AdvancedProofingIssueV2Themed SCXW251316638 BCX0\">At the moment<\/span><span class=\"NormalTextRun SCXW251316638 BCX0\">, we <\/span><span class=\"NormalTextRun SCXW251316638 BCX0\">understand that<\/span><span class=\"NormalTextRun SCXW251316638 BCX0\"> any business making the switch will declare the transitional profits as part of either its<\/span> <\/span><a class=\"Hyperlink SCXW251316638 BCX0\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/file-a-tax-return-online\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Highlight Underlined SCXW251316638 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW251316638 BCX0\">Self Assessment<\/span><span class=\"NormalTextRun SCXW251316638 BCX0\"> tax return<\/span><\/span><\/a><span class=\"TextRun Highlight SCXW251316638 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW251316638 BCX0\">\u202feach year, or its Making Tax Digital for Income Tax\u202f<\/span> <\/span><a class=\"Hyperlink SCXW251316638 BCX0\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/making-tax-digital-myths-dispelled\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Highlight Underlined SCXW251316638 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW251316638 BCX0\">final declaration<\/span><\/span><\/a><span class=\"TextRun Highlight SCXW251316638 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW251316638 BCX0\">. However, the government may introduce further steps to this process which will be revealed before MTD for <\/span><span class=\"NormalTextRun SCXW251316638 BCX0\">Self Assessment<\/span><span class=\"NormalTextRun SCXW251316638 BCX0\"> arrives in April 2026.<\/span><\/span><span class=\"EOP SCXW251316638 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p>The issue relates to the requirements for the end of period statement (EOPS) and tax payments.<\/p>\n\n\n\n<p>There&#8217;s a requirement to submit the EOPS by 31 January following the end of the tax year. The requirement to pay the Income Tax bill and National Insurance contributions doesn&#8217;t change, so this will also be due on this date.<\/p>\n\n\n\n<p>However, if the accounting period has not been completed at that point, the accounts won&#8217;t have been drawn up.<\/p>\n\n\n\n<p>Therefore, it will be impossible to provide accurate information on the EOPS, and only an estimate can be provided.<\/p>\n\n\n\n<p><span data-contrast=\"auto\">Any subsequent tax payment will also therefore also be an estimate. All of this will <\/span><span data-contrast=\"auto\">create<\/span><span data-contrast=\"auto\"> a requirement to <\/span><span data-contrast=\"auto\">indicate the amounts are provisional and to<\/span><span data-contrast=\"auto\"> file <\/span><span data-contrast=\"auto\">amendments when the actual profits are determined.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-contrast=\"auto\">It <\/span><span data-contrast=\"auto\">is therefore essential<\/span><span data-contrast=\"auto\"> to use the transition year to switch to the tax year for the basis period\u2014although don\u2019t forget that businesses will need to know their original overlap profits.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-contrast=\"auto\">If a business is planning to change its accounting period end, it may be worth looking to make this change by 5 April 2024 to minimise the impact, but also bearing in mind any commercial implications of a change.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"period-anchor-link\">Basis period reform: What accountants should do now<\/h2>\n\n\n\n<p>While some clients might be waking up to the reality of Making Tax Digital for Income Tax, very few are likely to have heard of basis period reforms.<\/p>\n\n\n\n<p>Don&#8217;t forget, too, that many who are outside the scope of MTD for Income Tax will still be affected by the basis period changes even if their accounting periods don&#8217;t match the tax year.<\/p>\n\n\n\n<p>The work involved in adjusting t<span class=\"TextRun Highlight SCXW151313677 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW151313677 BCX0\">o these new regulations <\/span><\/span>could be just as involved as that of embracing MTD for Income Tax.<\/p>\n\n\n\n<p><span class=\"TextRun SCXW155492406 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW155492406 BCX0\">As is often the case with changes to tax law, HMRC is relying upon accountants to not just get the message out, but also to explain the details.<\/span> <\/span><span class=\"TextRun Highlight SCXW155492406 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW155492406 BCX0\">If you <\/span><span class=\"NormalTextRun SCXW155492406 BCX0\">aren\u2019t<\/span><span class=\"NormalTextRun SCXW155492406 BCX0\"> already familiar with the changes, you can review <\/span><\/span><a class=\"Hyperlink SCXW155492406 BCX0\" href=\"https:\/\/www.gov.uk\/hmrc-internal-manuals\/business-income-manual\/bim81201\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Highlight Underlined SCXW155492406 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW155492406 BCX0\" data-ccp-charstyle=\"Hyperlink\">the current guidance<\/span><\/span><\/a><span class=\"TextRun Highlight SCXW155492406 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"> <span class=\"NormalTextRun SCXW155492406 BCX0\">and <\/span><span class=\"NormalTextRun SCXW155492406 BCX0\">check back regularly<\/span><span class=\"NormalTextRun SCXW155492406 BCX0\"> in case of any further <\/span><span class=\"NormalTextRun SCXW155492406 BCX0\">updates<\/span><span class=\"NormalTextRun SCXW155492406 BCX0\">.<\/span><\/span><span class=\"EOP SCXW155492406 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p>Accountants are not just in a position to help their clients but might be the only sources who are able to explain the on-the-ground reality of what the reforms mean for a client&#8217;s unique situation.<\/p>\n\n\n\n<p>Yet the task moving forward isn&#8217;t just to educate your clients about issues such as the requirement to switch to a new basis period, and <span class=\"TextRun Highlight SCXW223770690 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW223770690 BCX0\">relief<\/span><span class=\"NormalTextRun SCXW223770690 BCX0\">s<\/span> <span class=\"NormalTextRun SCXW223770690 BCX0\">introduced by<\/span><\/span><span class=\"TextRun SCXW223770690 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"> <span class=\"NormalTextRun SCXW223770690 BCX0\">HMRC.<\/span><\/span><span class=\"EOP SCXW223770690 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">&nbsp;<\/span><\/p>\n\n\n\n<p>It&#8217;s also to walk them through making key choices about whether to adjust their accounting period.<\/p>\n\n\n\n<p>For clients in business for some time, records of overlap profits might not be available, in which case it might be necessary to contact HMRC well ahead of time and request these.<\/p>\n\n\n\n<p>Considering the large number of businesses that will be requesting such information, you should ensure that preparations get underway as soon as possible. Using tools such as <a href=\"https:\/\/www.sage.com\/en-gb\/accountants\/products\/client-management\/\">client management software<\/a> can make this process significantly easier and more efficient.<\/p>\n\n\n\n<p><em>Editor&#8217;s note: This article was first published in January 2022 and has been updated for relevance.<\/em><\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">E-Book: The accountant&#8217;s guide to MTD for Income Tax<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download this free interactive guide, written by experts, about developing your practice approach to Making Tax Digital for Income Tax.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-0fffa372-27da-4c83-b370-078e6c62e153\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download here<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1214\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2024\/12\/MTD-accountants-1214x810.jpg\" class=\"single-cta__image\" alt=\"Women discussing Making Tax Digital\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2024\/12\/MTD-accountants-1214x810.jpg 1214w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n","protected":false},"excerpt":{"rendered":"<p>Discover how basis period reform will affect many of an accountant&#8217;s clients, even if Making Tax Digital doesn&#8217;t.<\/p>\n","protected":false},"author":356,"featured_media":9104,"menu_order":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[6],"tags":[223,226,23,29,206,27,28],"business_type":[115],"lilypad":[],"context":[],"industry":[],"persona":[67],"imagine_tag":[220,222,142,334],"coauthors":[351],"class_list":["post-10649","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-accountant-accounting","tag-accountant-tax","tag-bookkeeping","tag-mtd-accountants","tag-need-to-know","tag-tax","tag-vat","business_type-accountants"],"sage_meta":{"region":"en-gb","author_name":"Asavin Wattanajantra","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2021\/04\/NewsCafe_FY19_Payroll_40.jpg","imagine_tags":{"220":"Accountant accounting","222":"Accountant 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