The new online overlap relief form will allow unincorporated businesses and their agents to request the information HMRC holds on the available overlap relief that must be claimed in the 2023/24 transition year, or earlier if they have changed their accounting date in a previous tax year.

ICAEW’s Tax Faculty advised agents and taxpayers to wait for the new form to request this information from HMRC, rather than calling or writing a letter.

After testing highlighted the need to make some further refinements to the service, HMRC issued an email to agents on 24 August to announce that the form will now be available from 11 September 2023.  

Background

Business owners (sole traders, partners of trading partnerships and members of LLPs) who are subject to income tax on the profits of the business they own have been subject to the basis period method of taxation. The general rule was that for a business with a 12-month accounting period, the owners of the business were subject to income tax (and class 4 NIC) for a particular tax year on the profits for the accounting period ending in that tax year, or their share of the profits if they are a partner or member of an LLP.

From 2024/25, business owners will be subject to a tax year basis of taxation. This means that they will be taxed on profits arising in the tax year concerned, regardless of their accounting date.

Special rules apply for the 2023/24 tax year to help transition non-tax year end businesses from the existing basis period method of taxation to a tax year basis. This means that all overlap relief that the business has been carrying forward must be offset against profits in the 2023/24 tax year.