For accounting periods starting after 6 April 2024, for sole traders or partners, the cash basis is the default way to work out your income and expenses in order to file your Self Assessment tax return. This is a simplification method to aid the implementation of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA).
Depending on individual business circumstances, the cash basis may not be preferable, and therefore businesses do have the option to elect to apply the previous accruals basis method of accounting. There are also some exclusions on businesses who can use cash basis, such as farmers using herd basis.
Other changes to the cash basis include:
➡️ turnover thresholds have been removed.
➡️ the £500 limit on interest deductions has been removed.
➡️ the restriction on offsetting losses against other taxable income has been removed.
For further information, please get in touch with:
Paul Buckley
paul.buckley@waltonsba.co.uk
or
Ben Bramwell
ben.bramwell@waltonsba.co.uk
