How you account for your self-employed income affects your tax. Cash basis is now the default and suits most small businesses, but not all. We choose the right method for you and handle it.
Cash Basis Accounting
Cash basis accounting means you are taxed on money actually received and paid in the year, rather than on invoices raised and bills incurred, which is simpler and often better for cash flow. From 2024/25 it became the default for most unincorporated businesses. But traditional accruals accounting can suit businesses with stock, or those wanting to claim certain reliefs, so the choice still matters.
Your Tax Help Accountants works out which basis suits your business, cash basis for simplicity and cash flow, or accruals where stock or reliefs make it better, and prepares your accounts and return on that basis correctly. We make sure you are on the method that gives the right result for your situation.
Cash basis is simpler and now the default, but it is not always best, businesses with significant stock or those wanting to carry losses back may do better on accruals. Choosing correctly is a small decision that can affect your tax.
The Detail That Matters
How you account for self-employed income affects your tax. Cash basis, being taxed on money actually received and paid, is now the default and suits most small businesses, but traditional accruals accounting is better for some. Choosing correctly matters.
On cash basis you are taxed on money actually received and paid in the year, not on invoices raised and bills incurred. It is simpler and helps cash flow, because you are not taxed on invoices your customers have not yet paid.
From 2024/25, cash basis became the default for most unincorporated businesses. You can elect out into traditional accruals accounting if it suits you better, but for most small traders the simpler default is fine.
Businesses with significant stock, or those wanting to carry losses back or claim certain reliefs, may do better on accruals accounting, where income and costs are matched to when they are earned and incurred rather than paid.
We review your business and apply the basis that gives the correct result, cash basis for simplicity and cash flow, or accruals where stock or reliefs make it worthwhile, and prepare your accounts accordingly.
Most small businesses are fine on cash basis, but leaving it on default where accruals would be better, for a stock-heavy business or one wanting to carry a loss back, can cost you relief.
Key Figures
How We Help
Taxed on money in and out rather than invoices, cash basis is simpler and helps cash flow. It is now the default and suits most small businesses.
Businesses with stock, or wanting certain loss reliefs, may do better on traditional accruals accounting. We identify when that applies to you.
We choose and apply the basis that gives the correct result for your business, and prepare your accounts and return accordingly.
All the forms, calculations and correspondence handled on your behalf, so you never have to decode HMRC's rules or sit on hold.
A clear fixed fee quoted after a free call, your position explained in plain English, and never a surprise bill.
We act quickly, and where earlier years are involved we put those right too, reclaiming refunds or minimising penalties.
Most small businesses are fine on cash basis, but applying it where accruals would be better, or vice versa, can affect your tax and loss relief. We pick the right method rather than leaving it to default.
Recent Client Outcome
A self-employed client with growing stock had been left on the default cash basis and was unsure it was right for them.
What we did. We reviewed their business and found that with significant stock and a desire to carry a loss back, traditional accruals accounting suited them better, and elected them onto it.
The outcome. Accounting on the correct basis improved their tax position and allowed the loss relief they wanted, which cash basis would not have.
Choosing the right method deliberately, rather than accepting the default, produced a better result for their particular business.
Why People Come to Us
Questions Answered
Want us to handle this for you, end to end?
See our Bookkeeping Services →Free fifteen-minute call. Fixed quote within twenty-four hours. Your return filed, every expense claimed, your bill explained, and salon VAT, payroll and accounts handled if you own a salon. Same accountant, start to finish.
Or email info@yourtaxhelp.co.uk, we typically respond within two business hours.
📅 Free consultation calls available weekdays 1pm to 3pm and 7pm to 8pm. Pick a slot that suits you.