A consultation on how basis periods can be reformed for income tax for the self-employed has been launched recently, by HMRC.
The objective of the consultation is to gather views and opinions on how best to implement a proposal to simplify the rules under which profits of an unincorporated trading business are allocated to tax years using basis periods.
Alongside a specific proposal to simplify them and suggestions regarding transitional rules for moving to a new system, the consultation outlines the current rules for basis periods.
HMRC hopes to simplify the system before Making Tax Digital (MTD) is implemented.
The proposal affects the self-employed, partnerships, trusts, and estates with trading income. It would be mainly unincorporated businesses that do not draw up annual accounts to 31 March or 5 April and those that are in the early years of trade that would be affected by the proposed changes.
HMRC stated that it would like to gather views on the matter from businesses, advisers, tax software providers, and representative bodies. You can find the consultation here.