The allocation of accounting profits to basis periods for tax purposes was reformed by FA 2022, s 7, Sch 1 and ITTOIA 2005, ss 196–220 (Ch 15) is repealed from the tax year 2024/25. The rules which apply for the tax year 2024/25 onwards are set out in B8.101A The details of the rules which applied for tax years up to and including 2022/23 or for businesses that cease in 2023/24 are set out in B8.102–B8.108. The commentary below relates to the transition tax year of 2023/24. HMRC have issued guidance on how to work out transition profits which can be found at 'Work out your transition profit'.
Trades commencing before 2023/24 and not ceasing in 2023/24
For the transition year of 2023/24, the assessable profits will be those from the end of the period assessed in 2022/23 to 5 April 20241. So for an on-going trade which has a 31 December 2022 year end the transition period will be 1 January 2023–5 April 2024.
These rules mean that where the year
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