What are transition profits from basis period reform?

What are transition profits from basis period reform? Transition profit is the extra profit taxed when sole traders and partners with a year end outside 31 March to 5 April moved to the tax year basis in 2023-24. It is spread over 5 tax years, ending in 2027-28. No. GOV.UK says that if your accounting year end has always been on or between 31 March and 5 April, you will not have any transition profit. A year end of 31 March to 4 April is treated as if it were 5 April, unless you elect otherwise. Yes. The self-employment notes say transition profits charged to tax are included in taxable profits for National Insurance purposes, so each year's slice counts for Class 4. The law leaves it out of your net income, and HMRC says this is to reduce the impact on benefits and allowances. But the tax on it is worked out as if it were included. HMRC's example shows that if it would take your income over £100,000, the personal allowance you would lose is reflected in the tax charged on the transition profit. Read the full answer, with every source, at rightotax.co.uk.