Changes to accounting principles may not be a subject to draw the eye for most but the Government's confirmation that they are ploughing ahead (albeit a year later than planned) with basis period reform will bring an early pay-day for HMRC. Without getting too technical, the changes mean that the tax point for many partnerships will be brought forward and so HMRC get their hands on tax earlier than usual when the new rules are implemented in 2024/25. In real terms what does this mean? A dollop of cash for the Government a bit before time and a headache for partnerships wondering how to fund it...
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A windfall in the Budget small print?
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Under the government’s proposals, sole traders and partnerships will be subject to income tax on profits arising in a given tax year. For businesses with an accounting year end between 31 March and 5 April, this will mean no change. For other businesses, this is likely to bring forward the date on which taxable income will need to be calculated and tax will need to be paid.
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