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Does transitioning leave you at a loss?

Shared from Tax Insider: Does transitioning leave you at a loss?
By Kevin Read, October 2023

Kevin Read explains the special rules for trading losses arising in the tax year 2023/24. 

We are now well into 2023/24, the transitional year for the switch from the current year basis of assessment to the tax year basis for unincorporated businesses and LLPs.  

For those without a 31 March or 5 April year end, 2023/24 will see additional months being added to the assessment for the year, with the set-off of overlap profits (usually carried forward from commencement of trade) providing some mitigation. These extra ‘transition profits’ (i.e., the extra months’ profits less overlap profits) are ignored in calculating adjusted net income (relevant for personal allowance abatement and the high income child benefit charge) and are automatically spread over five years beginning in 2023/24, unless a taxpayer elects on a tax return to bring them into charge earlier.  

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