How are transition profits reported on the tax return?

This article provides some high level guidance on how these figures should be reported in 2023/24 for a continuing business. However, the exact reporting will depend upon the specific facts and circumstances. In particular, if a business commenced or ceased recently, or has losses, the position may be different. In all cases, HMRC’s guidance, including their transition profit calculator and Help Sheet HS222 (in particular worksheet 3) should be consulted where specific advice is required. 

More information on basis period reform generally can be found in the ATT’s basis period reform FAQs, including a recap of ‘standard part’ and ‘transition part’ profits. 

Which self-employment supplementary pages do we use? 

The full version (SA103F) of the self-employment pages needs to be used where a business is affected by basis period reform, as transition profits cannot be reported on the short version (SA103S). 

How do we report standard part profits and transition part profits? 

As a general rule, the SA103F should be completed by:

• reporting the results of the accounting period up to box 64/65,
• reflecting the basis period from box 66 onwards. 

In the following sections, we provide further high level guidance on how to complete these boxes for continuing businesses. 

Basis period start and end dates 

For 2023/24, if the business started before 6 April 2023 and did not cease in the year:

• the basis period start date in box 66 will be the day after the basis period for 2022/23 ended; and
• the basis period end date in box 67 will always be 5 April 2024. 

Exactly what figures are reported in the remaining SA103F boxes will depend upon what accounts the business draws up. 

Twelve month set of accounts – no change in accounting date 

If a business draws its accounts up to a date other than 31 March or 5 April and does not change their accounting date in 2023/24 then they should:

• report their results for the accounting period ending in the tax year in the first part of the SA103F (up to box 64/65); and
• bring in any adjustments required as a result of basis period reform, including transition profits, in the second part of the return. 

For example, a business drawing their accounts up to 31 December each year would normally report the following in their SA103F for 2023/24:

• The results for the accounting period ended 31 December 2023 in boxes 15 – 65
• Their total transition profit or loss (before overlap and spreading) in box 73.1
• Their overlap relief claimed in box 73.2
• The amount of the spread transition profits actually being brought into account in 2023/24 in box 73.3

Change of accounting date – one long set of accounts 

If the business wishes to changes its accounting date in 2023/24 and does this by drawing up one long set of accounts to 31 March or 5 April 2024, then they should: 

• report their results for the whole accounting period in the first part of the SA103F (up to box 64/65)
• remove their total transition profits (before overlap relief and spreading) from these results by way of a negative adjustment in box 68
• bring those transition profits back in as a positive amount in box 73.1 

For example, a business that normally draws their accounts up to 31 December each year but wishes to change to 31 March in 2023/24 could do this by drawing up one long set of accounts to cover the fifteen month period from 1 January 2023 to 31 March 2024. 

They would then do the following in their SA103F for 2023/24:

• Report the results for the full fifteen month accounting period ended 31 March 2024 (which will include any transition profits) in boxes 15 – 65
• Remove their total transition profits (before overlap and spreading) from these results by a negative adjustment in box 68
• Bring the total transition profits back in as a positive adjustment in box 73.1
• Include their overlap relief claimed in box 73.2
• Report the amount of the spread transition profits actually brought into account in 2023/24 in box 73.3 

Change of accounting date – two sets of accounts 

If a business wishes to change its accounting date in 2023/24, instead of drawing up one long set of accounts it could do this by drawing up a 12 month set and a second shorter set running to 31 March or 5 April 2024. 

In this scenario, the business should strictly prepare two sets of SA103 pages – a main set covering the later accounting period (which will report the taxable standard part and transition part profits) and a second supplementary set covering the earlier accounting period only (to provide the details underlying the standard part profits). 

The entries on the two sets of SA103F pages would be as follows: 

In the main SA103F:

• The results for the later, short accounting period should be included in the first part of the SA103F (up to box 64/65).
• A ‘balancing’ adjustment should then be entered in box 68, to adjust the box 64/65 figure so that box 73 gives the standard part profits.
• The total transition profits (before overlap relief and spreading) should then be brought in as a positive amount in box 73.1 (this is likely to be the box 64/65 figure). 

On the second, supplementary set of SA103F pages:

• The results for the earlier, 12 month accounting period only should be included in the first part of the SA103F (up to box 64/65). 

For example, if a business normally draws their accounts up to 31 December each year, but wishes to change to 31 March in 2023/24, they could do this by drawing up the following: 

• A 12 month set of accounts covering the period from 1 January 2023 to 31 December 2023
• A 3 month set of accounts covering the period from 1 January 2024 to 31 March 2024. 

They would then need to produce a main SA103F including:

• The results for the three month accounting period ended 31 March 2024 in boxes 15 – 65
• An adjustment in box 68 to ensure that box 73 gives the standard part profits figure (i.e. for the 12 months to 31 December 2023).
• The total transition profit (before overlap and spreading) as a positive adjustment in box 73.1 (this is likely to be the box 64/65 figure).
• The overlap relief claimed in box 73.2 
• The amount of the spread transition profits actually brought into account in 2023/24 in box 73.3 

This ‘main’ SA103F will therefore report the final standard part profits and transition part profits to be brought into account in the year. 

However, it will not contain detailed information on how the standard part profits were derived. To provide this information to HMRC, a second, supplementary SA103F should be prepared which includes the results for the 12 months ended 31 December 2023 in the first part (up to boxes 64/65). 

If the return is being prepared and filed using software, this should be able to produce both sets of pages. Where a paper return is being filed, both sets should be included. If the tax return is being submitted online through the HMRC portal, the second set can be submitted as an attachment. 

Failure to include the supplementary SA103F showing the figures relating to the first set of accounts should not result in any difference to the overall tax position. However, it could result in HMRC contacting taxpayers to request those figures, and there is a risk the return could be rejected as incomplete.