In a recent update, HMRC has provided crucial information regarding the calculation process for overlap relief, an essential component of the changes brought about by the basis period reform, applicable from 1 April 2023.
Overlap Relief Calculation
HMRC has clarified that overlap relief calculations are contingent upon the accurate recording of a business's profit and loss figures in HMRC systems. The calculations are based on data submitted by taxpayers in their previous year tax returns.
Notably, HMRC can only provide overlap relief if the necessary information has been accurately submitted in tax returns. If this data is missing, HMRC may assist by providing historic profit figures, allowing for the recalibration of overlap relief.
Obtaining Overlap Relief Figure
To obtain the overlap relief figure, businesses must fill out an online form available on the HMRC website. Accountants can also request this figure on behalf of their clients. However, it is crucial to initiate this process well in advance as HMRC requires up to three weeks to review the provided information.
Key Information Required for Overlap Relief Calculation
When filling out the online form, taxpayers need to provide specific details, including:
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Understanding the intricacies of overlap relief calculation is vital for businesses transitioning into the new tax year basis. By following HMRC’s guidelines and providing accurate information, taxpayers can ensure a smooth process and avoid delays in their tax filings.
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