CCH Personal Tax 2024.1: Release Notes

Scottish Rates of Tax for 2024/25

The new Scottish rates of tax have been updated but are not yet available as part of the 2024/25 computation.

CO₂ emissions and car fuel benefit multiplier

The Employment car fuel benefit multiplier has been updated as follows:

• 2024 to £27,800

• For 2025 the multiplier is frozen at £27,800

The latest car fuel emissions data to September 2023 is included with this release.

Background

For further information regarding the legislative changes and requirements the following links may be helpful:

Get Help with basis period reform - GOV.UK (www.gov.uk)

Work out your transition profit - GOV.UK (www.gov.uk)

BIM81290 - Transitional rules: transition part of the basis period exists - HMRC internal manual - GOV.UK (www.gov.uk)

Assessable Period

2023/24 is the transition year, the assessable period is made up as follows:

• Standard Part – The 12 months starting from the date immediately after the prior basis period's end date. (If you have a short or long accounting period, an adjustment is required to included in the adjustment box so that only 12 months of profits are assessed as the standard part)
• Transition Part – The remainder over the 12 months up to 5 April 2024.

 If a prior basis period has not been entered and there is no commencement date, please check the start date being used; it should not overlap any prior period that has previously been assessed.

The transition boxes match HMRC's notes and include the step references for ease of comparison. CCH Personal Tax applies HMRC’s guidance to calculate the assessable amount.  We have added a new section to the business tax backing schedule called Transition Part, which shows the calculations for steps 1 – 5, as applicable.

 A new tick box Apply late accounting date rules for periods ending 31 March to 5 April has been included:

This prevents any apportionment when using an accounting period end date between those dates.

To disapply the election and assess to the 5 April untick the box. A disclosure note automatically appears on the return. Once made, this election is irrevocable and the box is disabled for the following 4 years.

Business Tax

If the accounting period and tax year are not coterminous, please enter details of the subsequent accounting period to enable calculation of the transitional element. Add the new accounting period in the usual way: 

Basis periods has been renamed Assessable periods. For 2023/24, it automatically populates the start date, the options are:

• The day immediately following the end date of the prior year’s period,
• The commencement date if the business started within 2023/24, or
• The start date of the accounting period entered, if there is no prior period.

 In all instances the end date is automatically populated as 5 April 2024, unless you have a late accounting date (31 March to 4 April) or a cessation date has been entered.

 The Overlap relief available section has been replaced by Transition profits memo. This lists each year and the rolling amount of transition profits until 2027/28, enabling you to see the amount of transition profits assessed in each year and how much remains, if any.

Business Tax, Assessable Period, Adjustments Tab

Where a transition part exists, only the FULL pages (SA103F) are produced. Tick to use SA103S short form is disabled.

Any adjustment required is automatically calculated, based on whether there is a commencement date or the accounting period dates. This is calculated on a daily basis (please remember that 2024 is a leap year).

 To override any automatically apportioned fields , tick Lock Accounts this permits manual overrides, the following fields are now editable:

• Adjustment to arrive at profit or loss for this period
• Overlap profit brought forward
• Profit or loss of the transition part of the basis period

Where overlap profit brought forward exists, this is used in the following order:

1.       Against the transition part.

2.       If there is no transition part, but there is still an amount of overlap profit brought forward, it is offset against the standard part instead.

Spreading

Where there are transition profits and an overall profit position, the spread amount to be assessed in the year is calculated. It is possible to enter any additional transition profits to be accelerated accelerate and assessed within the tax year. This reduces the amount of transition profit to carry forward.

 If the overall position is a loss,CCH Personal Tax calculates how much of those losses can be used using terminal loss relief rules.

This field is a memo only for the purpose of the transition part. If a cessation date has been entered it may not show the full loss allowable under terminal loss relief rules it is still populated with the lower of the overlap relief amount or the overall loss, but the losses schedule is not restricted.

Profit

Loss

Changing accounting period to align with tax year

Where a taxpayer changes their accounting period to align with the tax year, we recommend extending the accounting period to 5 April (or a late accounting date), rather than creating a short accounting period ending in the same tax year.

For partnerships, this is an existing limitation.

For Business Tax, short accounting periods are not currently triggering multiple instances of page SA103F.

Changing basis period start date within Business Tax

When setting up a new client and the sole trade basis period start date is not the same as the accounting period start date, enter the commencement date if you are dealing with early years.

The only way to manually change this within the software is to change the accounting period start date. This changes the basis period start date if there is no prior tax year record. It affects the population of box FSE8 on the return; we suggest that if you use this approach, a white space note is added to provide the correct accounting period start date that should be in box FSE8. It is also necessary to manually apportion any adjustment needed for the standard part (and possibly the transition part) by ticking Lock Accounts.

Alternatively, enter the previous year's return details, before creating 2023/24 to replicate what was assessed in the prior year, so that the software can correctly calculate the period to use for 2023/24.

Partnerships

When ticking either of the Non active or limited partner or Active member of an LLP tick boxes, the page automatically scrolls up to the top. As this does not prevent the ticking of said boxes, we will look to address this low priority issue in a future release.

Computation

Where transition profits exist, a minimum of 20% of these are assessed in the tax year, with the remainder being spread over the following four tax years. The assessable transition profits do not form part of the main computation; instead an additional row plus Tax due on transition profit of £x,xxx appears after Income Tax charged after allowances and reliefs. The figure is the amount of transition profit before any brought forward losses have been offset, the tax amount is calculated on the lower amount after loss offset. This follows HMRC's computation.

HMRC Workaround relating to basis period reform (Specials and Exclusions)

As previously advised, we are introducing the updated specials and exclusions in a future release.

HMRC have introduced 5 Specials relating to basis period reform. These require workarounds due to their current validations and are noted below:

• Special 53 - Affects taxpayers claiming the trading allowance, where the standard profit is less than the trading allowance and the remainder is set against the transition profit. Validation rules will only allow an entry of up to the standard profit in box FSE16.1.
  • Enter the maximum possible trading allowance against the standard profit as usual.
  • Reduce the amount of transition profits in box FSE73.1 by any remaining trading allowance.
  • Provide details of the claim to trading allowance in a white space note and advise that the workaround has been used.

• Special 54 – Affects taxpayers with a positive adjustment in boxes FSE71/FSE72 and a transition loss that creates or increases an overall loss. Validation rules will result in the transition loss being used to incorrectly reduce the positive adjustments in FSE76.
  • Remove the adjustments from boxes FSE71/FSE72 and instead, enter them in box FSE75 within the Total taxable profits tab.
  • Add a white space note to advise that the workaround has been used.

• Special 55 - Affects taxpayers with a positive adjustment in boxes FSE71/FSE72 and a transition loss that creates or increases an overall loss, who want to use brought forward losses against the positive adjustments. Validation rules will result in an inaccurate maximum restriction of brought forward losses that can be claimed in box FSE74.
  • Remove the adjustments from boxes FSE71/FSE72 and instead, enter them minus the loss brought forward in box FSE75 within the Total taxable profits tab.
  • In the Losses screen, add a negative Adjustment to losses b/fwd for the amount used.
  • Add a white space note to advise that the workaround has been used.

• Special 56 - Affects taxpayers with a positive adjustment in boxes FPS10/FPS11 and a transition loss that creates or increases an overall loss, who want to use brought forward losses against the positive adjustments. Validation rules will result in an inaccurate maximum restriction of brought forward losses that can be claimed in box FPS17.
  • Remove the adjustments from boxes FPS10/FPS11 and instead, enter them minus the loss brought forward in box FPS19, Enterprise allowance etc.
  • In the Losses screen, add a negative Adjustment to losses b/fwd for the amount used
  • Add a white space note to advise that the workaround has been used.

• Special 57 - Affects taxpayers with a positive adjustment in boxes FPS10/FPS11 and a transition loss that creates or increases an overall loss. Validation rules will result in the transition loss being used to incorrectly reduce the positive adjustments in FPS18.
  • Remove the adjustments from boxes FPS10/FPS11 and instead, enter them in box FPS19, Enterprise allowance etc.
  • Add a white space note to advise that the workaround has been used.