Cash Basis for sole traders and partnerships – Advising on the new rules from April 2024

Objectives

For unincorporated businesses, the cash basis will, for tax purposes, become the default method of preparing accounts from 2024/25 onwards, although it will be possible to opt out. In this session we’ll identify the types of client who could benefit from using the cash basis. We’ll also look at how the cash basis works, focussing on the transitional adjustments required when moving from accruals-based to cash-based accounting.

Key topics

• The changes made by Finance Bill 2023/24
• Pros and cons
• Business intelligence
• What the software companies are saying
• Communicating with clients presented with this new choice
• Interaction with Making Tax Digital (MTD) for income tax
• Interaction with the Tax Year Basis (and Basis Period Reform)
• How the Cash Basis works
• Opting out of the cash basis
• Relief for capital expenditure
• Relief for interest costs
• Loss relief
• Transitional adjustments

Who should attend

Partners, managers and preparers of individual and partnership tax returns who need awareness of the new cash basis at both practice management and operational levels.