Quick answer
Basis period reform means sole traders and partners are now taxed on profits arising in the tax year (6 April to 5 April), rather than on accounting-year profits. 2024/25 was the transition year, and transition profits can be spread over up to five years.
Updated October 2026 · Figures based on 2025/26 rates
Filing your Self Assessment doesn’t have to be stressful. Let our qualified accountants handle everything — accurately and on time.
What changed
Before 2024/25, many businesses were taxed on accounts ending in the tax year. Now profits are apportioned to the tax year itself, which matters most for non-April year-ends.
The transition year
2024/25 included extra profit to align the periods. You can spread that extra transition profit over five tax years unless you choose otherwise.
Want an accountant to handle this for you?
Fixed price from £199 + VAT. Done for you online by UK accountants.
Order online now See our Self Assessment for sole traders service
Overlap relief
Any existing overlap relief is deducted from the transition-year profits, reducing the tax due.
Practical advice
Many businesses simply adopt a 31 March or 5 April year-end to keep reporting simple.
Don’t leave your tax return to the last minute. Avoid penalties, save time, and let an expert take care of it for you.
Frequently asked questions
Do I need to change my accounting date?
No, but a 31 March or 5 April year-end makes reporting simpler.
Does this affect payments on account?
Yes, higher transition profits can increase payments on account.
Ready to file without the stress?
Fixed price from £199 + VAT. Done for you online by UK accountants.
Order online now See our Self Assessment for sole traders service
