Income Tax (Trading and Other Income) Act 2005 section 240B

Entering the cash basis

Section 240B defines when a person carrying on a trade is treated as "entering the cash basis" for a particular tax year, which triggers the transitional adjustment rules in Chapter 17A.

• A trader enters the cash basis when they begin using it for a tax year having not used it immediately before
• Two conditions must both be met: the cash basis applies for the current tax year, and it did not apply immediately before the basis period began
• This definition is relevant for the transitional adjustment rules in Chapter 17A, which deal with the switch from accruals accounting to the cash basis
• The section was introduced by Finance Act 2013 and amended by Finance Act 2024