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News – 13.03.25

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130 Wood Street, London, EC2V 6DL
enquiries@buzzacott.co.uk T +44 (0)20 7556 1200

Corporate Tax: Basis Period Reform, Avoiding Increased Interest

All self-employed traders, whether sole traders, partners in partnerships, or members of LLPs, could be affected by the increased interest rates announced in the Autumn Budget 2024.

Background

Back in October’s Budget, the government announced that interest rate increases would come into effect in April 2025. This directly impacts self-employed traders who will be expected to pay an additional 1.5% (currently 2.5% above the bank base rate, increasing to 4% above base rate) on any late paid self-assessment liabilities. This includes understated estimated trading profits reported on their tax returns following the basis period reform.

Self-employed traders that have not aligned their accounting date to the tax year (31 March/5 April) will need to report their estimated trading profits for the period up to 5 April 2024 on their self-assessment tax returns by 31 January 2025. If the profits are underestimated, HMRC will charge the higher interest rate (4%) on the underpaid tax until it is settled.

LLPs can support their members in avoiding the increased interest charges through providing them with accurate estimates of their taxable profit allocations for the transitional year (2023/24) and going forward.

Antoine Housden

+44 (0)207 710 3121
housdena@buzzacott.co.uk
LinkedIn

Matthew Baldock

+44 (0)20 3972 6623
baldockm@buzzacott.co.uk
LinkedIn

How we can help

At Buzzacott, we understand that ensuring an accurate tax return submission and estimation of profits can be a demanding process, particularly for partnerships and LLPs. To support this, we offer two standard service options to help partnerships provide their partners with the information needed to complete their personal tax returns. We also create bespoke support packages for individuals and firms, should they require something different from our standard offering.

We can support you with

We can support you with:

Estimated profit allocation details

Preparing an estimated partnership tax computation based on the forecasted results for the accounting period and allocating the profits between the partners in accordance with the Partnership Agreement.

Communication letters

In addition to the above, we can also supply communication letters to be given to the partners providing details about the basis period reform and the entries required on their self-assessment tax returns in respect of the profits that have been allocated to them by the partnership.

We can also support the partners (and their advisors) with any questions that they may have when completing their personal tax returns or prepare the returns for partners, if required.

Bespoke offering tailored to you

Initially, we would propose a no-obligation call or meeting to run through the Basis Period Reform changes and how they will impact you. We would then work with you to develop your own tailored support package.

Get in touch

If you would like more information about any of our service options or to discuss the potential for a tailored option, use the form below to get in touch.