Income Tax (Trading and Other Income) Act 2005 section 225ZH

Chapter not to apply where cash basis used

Section 225ZH provides that the rules in Chapter 16 (which deals with certain adjustments to trading profits) do not apply where a trader calculates their profits using the cash basis of accounting.

• Chapter 16 adjustments are disapplied entirely when the cash basis is used
• This exclusion applies to the calculation of profits of a trade only
• Traders using the cash basis should ignore all provisions within this chapter
• This provision was introduced by Finance Act 2013 as part of the cash basis regime for small businesses