Cash basis

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Cash basis changes from the 2024 to 2025 tax year

If you’re a sole trader or partner, cash basis is the default way to work out your income and expenses when you file your Self Assessment tax return for the 2024 to 2025 tax year onwards.

From 6 April 2024, you will need to start keeping records for the 2024 to 2025 tax year using cash basis, unless you either:

  • choose to use traditional accounting
  • cannot use cash basis

Businesses that cannot use cash basis need to use traditional accounting.

Other changes to the cash basis include:

  • the £150,000 and £300,000 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
  • you can now use cash basis or traditional accounting for each of your businesses, if you have more than one business

If you want to use traditional accounting or cannot use cash basis accounting

You must opt out of cash basis. Tick the opt out box when you file your Self Assessment tax return.

Talk to a tax professional (such as an accountant) or legal adviser if you need help.

View a printable version of the whole guide

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