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• 03 Dec

  Basis Period Reform Funding For LLPs In The UK

  Changes to the UK tax system have given rise to a need for basis period reform funding for some LLPs (Limited Liability Partnerships).

  Basis Period Reform Summary

  In summary, Basis period reform aligns taxable profits with the tax year, creating one-off higher tax bills for some LLPs (and other self-employed business people) due to overlapping profits, potentially straining cash flow. Financing is available to help meet this additional requirement and pay the additional tax bills.

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  Basis Period Reform Funding For LLPs In The UK

  There are funding options specially created to help fund this cash flow need although many types of financing such as business loans or invoice financing could be used to increase the cash LLPs have on hand to assist with this situation.

  Specialist Funding To Help LLPs Cope with Basis Period Reform Tax Challenges

  The basis period reform is bringing significant changes to how Limited Liability Partnerships (LLPs) calculate their taxable profits. While the reform is designed to simplify tax processes by aligning taxable profits with the tax year (April 6 to April 5), it may create additional tax liabilities for many LLPs during the transition period.

  This one-off higher tax bill, arising from taxed overlap profits, could strain cash flow, leaving LLPs in need of financial support. To address these challenges, specialist funding for LLPs has been launched, offering financing solutions to help businesses meet tax obligations without disrupting operations. However, you should note that there are many other financing options that could equally help you bridge the gap.

  What Is Basis Period Reform?

  Basis period reform affects LLPs and other unincorporated businesses that do not align their accounting period with the tax year. The changes will require such businesses to transition to the new rules, potentially leading to the taxation of overlap profits in a single year.

  While HMRC allows the additional tax burden to be spread over five years, many LLPs may still face immediate cash flow challenges. For those struggling to manage these costs, tax liability funding can provide a much-needed solution.

  For detailed information on the changes see the government's Basis Period Reform information.

  How Specialist Funding Can Help LLPs

  To support businesses impacted by the reforms, some lenders have introduced LLP tax reform loans specifically designed to help cover the additional tax costs from basis period reform. These loans address cash flow concerns and allow LLPs to focus on their core activities without financial disruption. However, other forms of non-specialist business finance can also be used to address that same need.

  Quick Access to Funds

  Some financiers are offering basis period reform funding to provide expedited approvals, allowing LLPs to secure funds quickly when tax deadlines loom.

  Additional Tax Planning Support

  If you need help with your tax planning our recommended firm of Chartered accountants is on hand to help you.

  Who Should Consider Basis Period Reform Funding?

  LLPs across various industries, including professional services, agriculture, and creative sectors, may benefit from these specialist funding solutions. Businesses that experience seasonal fluctuations in income or have limited cash reserves may find cash flow solutions for LLPs particularly helpful.

  Steps to Access LLP Tax Reform Loans

  If your LLP is facing cash flow challenges due to basis period reform, follow these steps to secure the right financial support:

  Evaluate Your Tax Liability

  Work with a tax adviser or accountant to calculate the additional tax liabilities your LLP will face under the new rules.

  Research Funding Options

  FundInvoice can help you identify funding options that will assist you in meeting these additional liabilities. Call us on 03330 113622 to discuss your needs confidentially and to allow us to search for financing options that will help you.

  Apply Early

  With deadlines approaching and demand for these funding solutions expected to rise, applying early ensures you can access funds when needed.

  By acting early and leveraging these funding solutions, LLPs can turn a potentially disruptive change into a manageable financial adjustment.

  By Glenn Blackman