Proposed Changes To Tax Accounting Periods For The Self Employed
With the introduction of Making Tax Digital (MTD) for the self employed, which is due to take place in April 2023, the government has indicated that accounting periods for the self employed may need to be changed.
The government is proposing that the self employed will be required to have accounting year ends of between 31 March and 5 April each year. If the change does occur, then in the tax year of the change, self employed, who do not already have a year end of one of those dates mentioned above, will be taxed on more that 12 months income.
For example, in the year of the change, a taxpayer currently having a year end of 31 December, will be required to include 15 months of income on their tax return. The impact of the increased taxation could me mitigated by the use of Overlap profits brought forward.