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Starting on 11 September 2023, HMRC introduced an online form dedicated to handling requests for information on overlap relief. This streamlined process aims to make it easier for businesses to submit requests, ensuring they are efficiently addressed, separate from general correspondence.

HMRC is committed to providing comprehensive guidance on overlap relief and the alterations to the rules associated with the new tax year basis. This additional guidance will help individuals and businesses understand and navigate these changes effectively.

If you are a sole trader or part of a partnership and your accounting date falls outside the standard dates of 31 March or 5 April, and you are affected by the transition to the new tax year basis, it’s important to gather details about your overlap relief. This information will be essential as you prepare to submit your returns for the transitional year 2023 to 2024.

Furthermore, businesses that have overlap relief that should have been applied in the past but wasn’t, can also utilise it in the upcoming tax year, 2023 to 2024.

Please note, only taxpayers with an accounting date other than 31 March or 5 April are affected by this reform.

As part of these changes, starting from April 2024, businesses will be taxed based on their profits for the entire tax year, rather than the previous practice of assessing profits for the accounting year ending within a tax year.

Ahead of further guidance being published, you can find out more about the new tax year basis in the Business Income Manual. Information is also available in a news article on basis period reform.

It is worth noting that overlap relief information can only be provided if these figures are recorded in HMRC systems, taken from information submitted by you as part of previous tax returns. If this information has not been submitted in tax returns, HMRC will not be able to provide it.

When looking at a request for overlap relief information, HMRC will need some details about your business to be able to find the correct figures to report back to you. HMRC asks that you provide:

• customer name
• National Insurance number or Unique Taxpayer Reference (UTR)
• either name or description of business, or both
• whether this business is a sole trader or part of a partnership
• if the business is part of a partnership, the partnership’s UTR
• date of commencement of the self-employed business, or date of commencement as a partner in a partnership (if not known, then the tax year of commencement)
• the most recent period end date up to which the business used to report its profit or loss

If you would like to discuss overlap relief in more detail, please contact the team at CB Reid for guidance.