HMRC has recently launched a consultation on how basis periods can be reformed for income tax for the self-employed.
The consultation seeks to gather views on how best to implement a proposal to simplify the rules under which profits of an unincorporated trading business are allocated to tax years using basis periods. The consultation also includes suggestions regarding transitional rules for moving to the new system.
HMRC aims to simplify the system before Making Tax Digital (MTD) for income tax is implemented.
The proposals mainly affects unincorporated trading businesses (soletraders & partnerships) that do not draw up annual accounts to 31 March or 5 April and those that are in the early years of trade.