BIM70000 | Cash basis: contents

This chapter explains the cash basis. This is a simpler way for eligible businesses to calculate their taxable income, allowing them to be taxed on the basis of receipts less payments of allowable expenses. For the rest of this chapter, any references to trade include professions and vocations.

For tax years up to 5 April 2024 please refer to the guidance within pages BIM70005 to BIM70100. This also explains the alternative basis for barristers.

Further changes to cash basis were introduced in Finance Act 2024 which apply to tax years starting on or after 6 April 2024 (2024-25). All eligible businesses (see BIM72010) must start using the cash basis from 6 April 2024, unless they elect to calculate their profits in accordance with generally accepted accounting principles. Please refer to the guidance within pages BIM72005 to BIM72073 for tax years 2024-25 onwards.