The cash basis is a simpler way of preparing accounts which takes account only of cash received and cash paid out. Unlike the traditional accruals basis, there is no need to match income and expenses to the period to which they relate, or take account of debtors and creditors.

Currently, only unincorporated businesses with turnover of £150,000 or less can use the cash basis, and must elect to do so. However, this is to change from 6 April 2024. From that date, the turnover thresholds are removed and the cash basis will become the default basis, meaning you will need to make an election to use the accruals basis. The cash basis is not available to companies.

We can explain what this change means for your business and also what adjustments are necessary when changing basis to prevent the same income from being taxed twice.

Contact us at enquiries@ardury.co.uk to discuss further.