Should I change my year end date?

With confirmation that the basis period reform is going ahead as planned, it could impact many FHL businesses, where they trade as unincorporated businesses (sole trade or partnerships) and who do not use 5 April or 31 March as their accounting date.

From 6 April 2024, profits and losses of sole traders and partnerships will be calculated based on the tax year itself, not the accounting period ending in the tax year as is currently the case.

Dependant on your year end, this could see more than 12 months’ worth of profit being taxed in a single tax year which will in turn significantly increase tax liabilities.

Although there is the possibility to spread these doubled taxed profits over a 5 year period, it may still lead to cashflow issues.

Below is an example for a FHL unincorporated business trading to 31 December each year:

As can be seen, the changes are far from straightforward and could lead to added complexities and tax. With less than a year until these changes come into effect, now is the time to prepare and check what impact they will have on your FHL business.

For more information or advice based on your circumstances, please get in touch with our furnished holiday let specialists by calling one of our offices or emailing leisure@eqaccountants.co.uk.