HMRC Overlap Relief Form – Unincorporated Businesses

Businesses that are sole traders, partners of trading partnerships, and members of LLPs who pay income tax on the profits of their businesses are subject to the new basis period method of taxation.

For tax year 2024/25, business owners will be subject to a tax year basis of taxation. This means that they will be taxed on profits arising in the tax year concerned, regardless of their accounting date.

Special rules apply for the 2023/24 tax year to help transition non-tax year end businesses from the existing accounting year end method of taxation to a tax year basis. This means that all overlap relief that the business has been carrying forward must be offset against profits in the 2023/24 tax year.

There is a new online form to request overlap information that allows unincorporated businesses to request the information HMRC holds on the available overlap relief that needs to be claimed for the 2023/24 transition year. This form was launched on the 11 September and, given the recent delays experienced by taxpayers trying to call HMRC or get a timely response to letters, it may prove the best option, especially as HMRC state they will have a specialist team involved.

Please contact us if you need assistance with changing your accounting year end or understanding the new system as we have expertise in performing the new calculations and advising business owners in this complicated area.