Kevin Read explains why some trading businesses face a big decision.
Unincorporated trading businesses are going through their biggest tax change for a generation, with the switch to a tax year basis of assessment replacing the ‘basis period’ system for 2024/25. The tax year 2023/24 is a transition year with special rules. Further change is now on the way.
‘Cash basis’ to become the norm
Since 2013/14, smaller unincorporated trading businesses have had the option of preparing their tax computations on a cash basis (i.e., looking at when money is received or paid) rather than the normal accruals basis of accounting.
The cash basis has been expanded for such taxpayers (by FA 2024, Sch 10), including those in partnerships, from the tax year 2024/25. The changes will not apply to property businesses or those entities already excluded from
