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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profits to basis periods for tax purposes was reformed by FA 2022, s 7, Sch 1 and ITTOIA 2005, ss 196–220 (Ch 15) is repealed from the tax year 2024/25.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 and the rules for the transitional tax year of 2023/24 including businesses starting in 2023/24 are set out in B8.101B. The details below therefore only apply to continuing trades for tax years up to and including 2022/23.

For most 'continuing trades' (ie those that have been trading for three years or more) the basis period is the period of 12 months ending with the accounting date in that tax year¹.

Example 1

C runs a long established business and has always prepared accounts to the 31 December. Her assessment for 2019/20 was based on the profits of the period 31 December 2019.

If there is no accounting date in a tax year but there is no actual change of accounting