Kevin Read warns that the transition rules for unincorporated businesses are less generous than you might think.
I have previously discussed issues around changing the accounting date in 2023/24: the transition year to the ‘tax year’ basis of assessment for unincorporated businesses. The additional profits arising in the year (after set-off of any overlap profits brought forward) are ‘transition profits’, which are both ignored for adjusted net income purposes (so do not impact on income for personal allowance abatement or high-income child benefit charge purposes) and automatically spread over five years for income tax purposes, starting in 2023/24.
In some circumstances though, the transition profits may still be taxed at an effective rate of up to 60%.
Example: Rohit changes accounting date
Rohit is a self-employed sports journalist with
