Basis of assessment ― change of accounting date
Special rules apply to calculate a trader’s taxable profits when there is a change of accounting date. These special rules apply for unincorporated businesses only. The rules apply equally for businesses using the simplified cash basis. See the Eligibility for the simplified cash basis guidance note.
The Government is introducing a reform of basis periods for unincorporated trading businesses whereby businesses will be taxed on the profits arising in a tax year, and therefore the change in accounting date rules will no longer apply. The transition to the new rules will take place in 2023/24, and the new rules will come into force from 6 April 2024, see the Basis period reform guidance note for details of the changes.
A trader will change their accounting date when they draw up accounts for a period which is not 12 months long. In this case, the current year basis cannot apply in the usual way, so special rules are required to determine the taxable trading profits.
The change of accounting date rules will not apply in the year the trader commences or the year in which the trade ceases ― in these instances, the opening and closing year rules will apply. See the Basis of assessment ― opening years and Basis of