Basis Period
UK tax glossary · Last reviewed: April 2026
Historically, sole traders and partnerships were taxed on profits of their accounting year ending in the tax year (the 'current year basis'). From 2024/25, the UK moved to a 'tax year basis': profits are taxed in the tax year in which they arise, regardless of the accounting date chosen.
The transition year (2023/24) created a complex overlap-profits calculation for businesses whose accounting year did not end on 31 March or 5 April. Overlap profits — profits taxed twice under the old rules — were released and deducted in 2023/24.
From 2024/25 onwards, self-employed people with a non-April year-end need to apportion profits between tax years. Choosing a 31 March or 5 April year-end avoids the complication entirely.
Common questions
Does the basis period reform affect me if my accounting year ends 31 March?
No. A 31 March year-end is treated the same as 5 April for these purposes, so your tax year and accounting year remain aligned with no apportionment needed.
How were overlap profits calculated?
They arose under the old opening-year rules when a new business's first profits were taxed twice. HMRC held each trader's overlap profit figure; it was released in full in the 2023/24 transition year.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.