Basis Period Reform - new form to request overlap relief coming soon

HMRC have confirmed that an online tool will be launched on 29 August 2023 [edit 23/8/23: now delayed until 11 September 2023] allowing businesses, the self-employed and their agents to request details of overlap profits where that data is held by HMRC. An online 'g-form’ will be available, with submissions processed by a dedicated team in HMRC who will then respond by email.

The form will be able to handle requests by agents covering multiple clients, and will be publicised by HMRC ahead of its launch. We will also share updates via our website.

In the meantime, overlap figures can continue to be requested from HMRC by letter or phone. Given processing delays, it may be simpler to wait for the g-form to be launched on 29 August [edit 23/8/23: 11 September].  

Recap of basis period changes & overlap relief 

From April 2024, the existing basis period rules (the ‘current year basis’) will be abolished and replaced with a tax year basis of assessment.  Under the tax year basis, any unincorporated businesses will be subject to tax on their profits arising in the tax year, regardless of their accounting period end. 

Tax year 2023/24 will act as a transitional year, in which we switch over from the current year basis to the new tax year basis.  In this transitional year, the basis period will be made up of two different elements:

• A 'standard part' being the normal basis period (i.e. the 12 months following the end of the basis period for 2022/23); and
• A 'transition part' running from the end of the standard part to 5 April 2024 (or 31 March 2024 if accounts are drawn up to that date).

In effect, businesses will be required to bring into account an additional amount of profits running from the end of their normal basis period to the end of the 2023/24 tax year.  Businesses will be able to deduct any brought-forward overlap relief from the additional transition part profits.

Under the current year basis, overlap relief was commonly created in the opening years of trade where a businesses drew up accounts to a date other than 31 March or 5 April, and was normally carried forward until the business ceased or changed accounting dates. The introduction of the 'tax year basis' of assessment provides the final opportunity to use overlap profits, so it is vital that the self-employed and their agents know their overlap figures in order to claim the available relief in 2023/24.