# Basis period reform and the tax year basis

Canonical: https://taxmo.co.uk/self-assessment-guide/basis-period-reform
Tax year: 2026/27
Part of: [Self Assessment topics](https://taxmo.co.uk/self-assessment-guide)

Basis period reform changed how self-employed and partnership profits are matched to tax years. GOV.UK says the reform took effect for the 2024 to 2025 tax year, with a transition year in 2023 to 2024.

## The tax year basis

From the 2024 to 2025 tax year you are taxed on the profit of the tax year itself, 6 April to 5 April. If your accounting year ends on a different date, you apportion the profits of your accounting periods to the tax year. There are equivalence rules for accounting dates between 31 March and 5 April, so those businesses do not have to apportion small amounts of profit.

## Who it affects

Sole traders and partners whose accounting year does not end on or between 31 March and 5 April. If yours ends on 31 March or 5 April, your accounts already line up with the tax year.

## Transition profit and the 2026/27 return

In the 2023 to 2024 transition year, the basis period ran on to 5 April 2024, and the profit of that extra part is the transition profit. After deducting overlap relief, that transition profit is spread over 5 years, starting with 2023 to 2024 and ending with 2027 to 2028, unless you chose to have more of it taxed earlier. So if you had transition profit, part of it still belongs on your 2026/27 return.

Overlap relief could not be used after the 2023 to 2024 tax year. HMRC has a tool to work out your transition profit.

## Common mistakes

- Reporting the profit of an accounting year that ends part way through the tax year without apportioning it.
- Leaving the yearly slice of transition profit off a later return.
- Trying to claim overlap relief in a year after 2023 to 2024.

## Sources

- [HMRC, Basis period reform (policy paper)](https://www.gov.uk/government/publications/basis-period-reform/basis-period-reform)
- [HMRC, Work out your Basis Period Reform transition profit](https://www.gov.uk/guidance/work-out-your-transition-profit)
- [HMRC, Get help with Basis Period Reform](https://www.gov.uk/guidance/get-help-with-basis-period-reform)

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Checked against GOV.UK on 6 November 2026. Rules and figures change, so verify on GOV.UK before you rely on this. General information, not tax advice.