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Basis period (old rules) ― closing years

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Basis period (old rules) ― closing years

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
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The allocation of accounting profits to basis periods for tax purposes was reformed by FA 2022, s 7, Sch 1 and replaced with a tax year basis from the tax year 2024/25. The rules which apply for the tax year 2024/25 onwards are set out in the Tax year basis from 2024/25 onwards guidance note and the rules for the transitional tax year of 2023/24 including businesses starting in 2023/24 are set out in the Basis period transitional rules 2023/24 guidance note. The details below therefore only apply for businesses ceasing in tax years up to and including 2023/24.

The rules on closing years apply to unincorporated businesses. These rules apply equally to businesses using the simplified cash basis. See the Cash basis - overview guidance note.

The closing year rules

These rules apply when a trader ceases to trade.

Closing year rules are much simpler than the opening year rules. In the penultimate year (ie the tax year prior to the cessation of the trade), the normal current year basis rules apply, ie

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