HMRC overlap relief form goes live

HMRC overlap relief form goes live

Sep 13, 2023

Following a short delay, HMRC has sorted out the outstanding IT issues and launched an online service to support affected taxpayers with calculations for overlap relief

The correct calculation of overlap relief is a critical element of the changes to basis period reform, which affect tax years from 1 April 2023 and means many taxpayers will have to calculate and report transition profit.

The online service went live on 11 September after a two-week delay due to technical hitches with the new software system.

The form is now live and available at Get your Overlap Relief figure via the green Start button halfway down the page. As the page states users will ‘need to sign in with your Government Gateway user ID and password for self-assessment (if you do not have a user ID, you can create one when you first try to sign in)’.

An HMRC spokesperson said: ‘We recommend that people read the guidance before deciding whether they need to use the form.’

The online form allows self-employed, sole traders and partnerships to contact HMRC about help with calculating the value of overlap relief which can be claimed if their reporting dates have to change due to the overhaul of the basis period tax year accounting.

Before the launch, taxpayers had to write to HMRC for support, which led to long delays, particularly with the current postal backlog at the tax authority.

HMRC has also issued new guidance on when and how to include overlap relief in 2023-24 tax returns when a sole trader has transition profit to report. The transitional part of the profits will be spread equally over five tax years starting in 2023-24.

Overlap relief will affect taxpayers who have to report under the new basis period reporting rules from 6 April 2023. This means profits will need to be reported up to the tax year end, even if the accounting year ends at a different time. As a result, profits may need to be apportioned between accounting periods.

During the transition period, overlap relief can be used in the 2023-24 tax year if the accounting end date:

  • does not align with the tax year (accounting dates between 31 March and 5 April align with the tax year).
  • changed to align to the tax year, but overlap relief was not used; or
  • changed during 2023-24 tax year to align with the tax year.

It is worth noting that if a business stopped trading in the 2023-24 tax year, overlap relief can still be included in tax returns.