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As described in B5.326, the ATT have provided the following examples of the impact of basis period reform for the purposes of averaging¹³.

Example 1

This example covers the situation of profits in both the standard and transition parts. A farmer has a year end of 30 September, has been trading for some years and has overlap profits of £5,000. Their profits are as follows:

1. Ìý

   •ÌýÌýÌýÌý 30 September 2022 - £10,000

1. Ìý

   •ÌýÌýÌýÌý 30 September 2023 - £20,000

1. Ìý

   •ÌýÌýÌýÌý 30 September 2024 - £40,000

1. Ìý

   •ÌýÌýÌýÌý 30 September 2025 - £15,000

Taking each tax year in turn:

2022/23

In 2022/23 the farmer will be taxed on the profits for the year ended 30 September 2022 - £10,000. For the purposes of this example it is assumed they do not opt to average with the previous year.

2023/23

In 2023/24, which is the transition year, the farmer would, without the basis period reform, have been taxed on profits in the