Sole Traders: Key dates in 2024

There are new rules when it comes to taxing sole trader profits, which are due to come into effect in this next new tax year. Starting in April 2024, certain self-employed individuals (sole traders) and partnerships will experience a change in how their profits are taxed, with calculations now aligning with the tax year instead of their accounting year.

This shift is a result of the introduction of new rules known as ‘basis period reform.’ Under these rules, all profits from self-employment and partnerships will be subject to taxation based on the tax year. The transitional year for this change is 2023/24, during which specific rules have been established to facilitate a smooth transition for relevant businesses. These transitional measures aimed to ensure that all businesses affected by the basis period reform were prepared to adopt the tax year basis effectively from 6th April 2024.

If your accounting period concludes between 31st March and 5th April, inclusive, there is some flexibility in the regulations. You can continue reporting profits as usual, as these rules consider any accounting period ending on these specific dates as aligning with the tax year. Nonetheless, it’s important to note that you might still be impacted by basis period reform if you have unused overlap relief.