Draft Finance Bill 2021-22 – Abolition of Basis Periods
LITRG has commented on draft legislation removing the existing rules on basis periods.
These changes mean the ongoing complexity of existing ‘basis periods’ is removed and tax for the self-employed (including partners) will be based on profits in the tax year. This should make it easier for low-income unrepresented taxpayers to understand their tax position from the outset and comply with Making Tax Digital for Income Tax requirements in future. However, for businesses who need to use an accounting date other than the tax year end (31 March / 5 April) for commercial reasons, the proposals will increase complexity compared to the current system.
Read the submission here.
Our response to the August 2021 consultation on basis period reform is available here.