What is the basis period for self-assessment?
Answered 11 March 2026
Basis Periods for Self-Assessment
What the law says
The statutory framework for basis periods is found in ss.196–220 ITTOIA 2005. The key provision, s.7(2) ITTOIA 2005, provided that "the profits of a tax year are the profits of the basis period for the tax year" — however, this subsection was omitted by FA 2022 for the 2024-25 and subsequent tax years.
The general rule under s.198 ITTOIA 2005 is that the basis period for a tax year is the 12-month period ending with the trader's accounting date in that tax year.
The s.9 TMA 1970 self-assessment framework requires every return to include an assessment of the amounts in which the person is chargeable to income tax and capital gains tax for the year of assessment, based on the information in the return.
HMRC guidance / practice
HMRC's Business Income Manual (BIM) sets out the basis period rules as follows:
The "current year" basis applies since 1997-98 (or 1994-95 for trades commencing on or after 6 April 1994). The general rule is that profits for a tax year are those arising in the 12 months ending with the accounting date in that year.
Special rules apply in the early years of a trade (ss.199–200 ITTOIA 2005):
| Year | Basis Period |
|---|---|
| Year 1 | Date of commencement to 5 April at end of the tax year |
| Year 2 | If accounting date is ≥12 months after commencement: 12 months to that accounting date. If <12 months after commencement: 12 months from date of commencement. If no accounting date in Year 2: the full tax year (6 April to 5 April) |
| Year 3 onwards | 12 months ending with the accounting date in the tax year (general rule) |
Special rules also apply for the year of cessation (s.202 ITTOIA 2005) and where there is a change of accounting date (ss.214–219 ITTOIA 2005).
Important reform — tax year basis from 2024-25 onwards: The basis period rules no longer apply from the 2024-25 tax year. Instead, individuals are taxed on the profits actually arising in the tax year itself. The 2023-24 tax year was a transitional year with special rules under Schedule 1 FA 2022.
⚠️ Note: The basis period rules described above (ss.198–202 ITTOIA 2005) applied up to and including 2022-23. For 2023-24 (transitional) and 2024-25 onwards, different rules apply — see BIM81201 and BIM81230–BIM81360.
Citation sources
Part IV Income Tax, Corporation Tax and Capital Gains Tax Chapter III Management: Self-Assessment etc. Income tax and capital gains tax Returns to include self-assessment. 179 For section 9 of the Management Act there shall be substituted the following section— Returns to include self-assessment. 9 1 Subject to subsection (2) below, every return under section 8 or 8A of this Act shall include an assessment (a self-assessment) of the amounts in which, on the basis of the information contained in
An individual who carries on a trade, profession or vocation is taxed on the profits arising in the ‘basis period’ for the tax year. The general rule is that the basis period for a tax year is the period of 12 months ending with the trader’s accounting date in that year. The accounting date is the date in the tax year to which accounts are drawn up. Different rules apply in the early years after the trade commenced, to the year of cessation, and for tax years in which there has been a change of
This guidance is divided into five main parts: The normal rules for determining basis periods (S198-S202 ITTOIA 2005), see BIM81010. Special rules where there is a change of accounting date (S214-S219 ITTOIA 2005), see BIM81035. Apportioning profits and losses to basis periods (S203-S206 ITTOIA 2005), see BIM81065. Giving ‘overlap relief’ for overlap profits (S205-S220 ITTOIA 2005), see BIM81075. The ‘previous year’ rules and the transition to the ‘current year’ basis. See BIM81100. The tax year
The general rule is that the profits for a tax year are those arising in the period of 12 months ending with the accounting date in that year. The general rule will always apply to a continuing trade using the same accounting date each year from Year 3 onwards. Different rules apply: For the early years after trading commenced, see BIM81015; For a year in which there is no accounting date, see BIM81015; For the year of cessation, see BIM81025; Where there is a change of accounting date, see BIM8
SS5-7 Income (Trading and Other Income) Act 2005 (ITTOIA 2005); S35 Corporation Tax Act 2009 (CTA 2009) For Income Tax the general charging provisions are in SS5-7 ITTOIA 2005. S5 ITTOIA 2005 establishes that Income Tax is charged on the profits of a trade, profession or vocation. S6 ITTOIA 2005 sets out the territorial scope of the charge to tax on trade profits. Details of the section are at BIM15010. S7(1) ITTOIA 2005 provides that tax is charged ‘on the full amount of the profits for the tax
Year 1 The basis period for the first tax year in which a person starts to carry on a trade: begins with the date of commencement, and ends with 5 April at the end of the tax year (or any earlier date of cessation). Year 2 The basis period for the second tax year depends on: whether or not there is an accounting date in the year, and If there is an accounting date, whether this date is less than 12 months, or 12 months or more, since the date of commencement. This table summarises the normal bas