Basis period reform – get your overlap relief requests in as soon as possible

If you or your clients are affected by basis period reform, and need to request overlap relief figures from HMRC, then you should submit your request as soon as possible to ensure you have the information in time to meet the 31 January 2025 self-assessment filing deadline. 

Basis period reform represents a major change in how the trading profits of unincorporated businesses (such as sole traders and members of partnerships) are calculated for income tax purposes. 

The transitional rules which apply in 2023/24 can result in more than 12 months’ worth of profit being brought into account where a business doesn’t draw its accounts up to 31 March or 5 April. To alleviate this, businesses should deduct any unrelieved overlap relief they have. 

Where a business does not know what overlap relief they are entitled to, they (or their agent) can request this information from HMRC. The easiest way to do this is to use the dedicated online g-form. There is no need to submit a request to HMRC for confirmation if the overlap figure is already known. HMRC have also recently released an online tool to help work out overlap relief based on the records of the business. 

HMRC have informed us that they are currently responding to requests for overlap relief figures within around two weeks. However, they are expecting to see more requests submitted as we move into late December and January. As a result, HMRC are encouraging agents and taxpayers to submit requests as soon as possible, and by 31 December at the latest, to enable them to receive the figures by the 31 January self-assessment deadline. 

Those submitting requests after 31 December may not receive a reply from HMRC in time for the filing deadline. Where this is the case, the self-assessment return should be filed anyway, but with a provisional figure included for overlap relief. This can then be corrected once HMRC have provided the figure. Not having an overlap relief figure is not included on the list of reasonable excuses that HMRC will accept for late filing.