Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer Basis period reform means sole traders and partnerships are now taxed on the profits arising in the tax year itself, 6 April to 5 April, rather than on their accounting year. Businesses whose accounts do not run to the end of March or early April now apportion profits across tax years.

What changed

  1. The old rules. You were taxed on the profits of the accounting year ending in the tax year, which caused overlap and complexity at the start and end.
  2. The new rules. From 2024/25 onward, you are taxed on the profits that fall within the tax year itself.
  3. Apportioning profits. If your accounts do not align with the tax year, you take a slice of two accounting periods to match the tax year.
  4. Overlap relief. The transition used up historic overlap profits, giving relief for tax paid twice at the start of the business.

What it means for you

If your accounting date is 31 March or close to 5 April, little changes. If it is elsewhere, for example 30 June, your tax return now blends two sets of accounts, and estimates may be needed before the later accounts are finalised. Many businesses have simply moved their accounting date to 31 March to keep life simple.

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Frequently asked questions

What is basis period reform?

It changed how sole traders and partnerships are taxed, from the profits of the accounting year ending in the tax year, to the profits arising in the tax year itself, 6 April to 5 April.

Who is affected by basis period reform?

Sole traders and partnerships whose accounting date is not 31 March or close to 5 April are most affected, because their profits now have to be apportioned across tax years.

What is overlap relief?

It gives relief for profits that were taxed twice at the start of your business under the old rules. The transition to the new basis used up any remaining overlap relief.

Should I change my accounting date?

Many businesses have moved their accounting date to 31 March to align with the tax year and avoid apportioning profits across two sets of accounts. Whether it suits you depends on your circumstances.

Do I need estimates on my return?

If your accounts are not finalised in time, you may need to include a provisional figure and amend it later. Aligning your accounting date with the tax year avoids this.