Do you prepare your tax return on a Cash or Accrual Basis?
Cash basis - income and expense are recorded on the date paid (expense) and received (income).
Accrual basis - income and expense are recorded when incurred, regardless of when cash is exchanged.
The method chosen will determine the date to use
Cash Paid date
Accrual Invoice date
The system default is to assume that you have prepared your self employed accounts using the accruals method. This is because HMRC would normally expect this. However it is acceptable to enter your details on the cash basis, if you do this you need to advise HMRC of this on the self employed pages of your Tax Return. To do this:
- Click on the Self-Employed Page
- Select the 'YES' radio button to change to Cash Basis
- Click Save