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HMRC has recently launched a consultation on how basis periods can be reformed for income tax for the self-employed.
The consultation seeks to gather views 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.
In the consultation, the current rules for basis periods are outlined, alongside a specific proposal to simplify them and suggestions regarding transitional rules for moving to a new system.
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 mainly affects 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.
HMRC stated that it would like to gather views on the matter from businesses, advisers, tax software providers and representative bodies. The consultation can be found here.
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