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Proforma income tax calculation


Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
tag-icon Tax Returns

Proforma income tax calculation


Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
tag-icon Tax Returns
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The proforma for calculating an individual’s tax liability is very important. The method for arriving at the tax due is set out step by step in ITA 2007, s 23. This is illustrated in Proforma 1 ― income tax calculation and is explained in words below.

The tax software will calculate the tax due automatically based on the entries made on the tax return, however, it is important to know the principles of the income tax computation in order to check it is correct.

The calculation for the tax years 2023/24 to 2027/28 is modified where the taxpayer has transition profits from 2023/24 due to basis period reform. This is discussed below.

Impact of basis period reform on the income tax computation

Basis period reform means that self-employed taxpayers transition to a tax year basis from 2023/24. As this may give rise to more than 12 months of income being taxable in the 2023/24 tax year, transitional rules apply to the taxation of the extra income, known as ‘transition profits’. The taxpayer may also elect to spread

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  • 24 Mar 2025 13:21

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