Income Tax (Trading and Other Income) Act 2005 section 31D

Effect of election under section 25A

Section 31D explains how a cash basis election takes effect, how long it lasts, and the circumstances under which it ceases to apply.

• A cash basis election applies from the tax year in which it is made and continues automatically for all subsequent tax years until it ceases to apply.
• The election ceases to apply if the qualifying conditions (conditions A to C in section 31A) are no longer met for a future tax year, or if a change of circumstances makes the accruals basis more suitable and the person chooses to use it.
• Where a cash basis election is in force for a tax year, it covers all trades, professions or vocations carried on by that person during that year — not just the one that prompted the election.
• A person using the cash basis cannot claim capital allowances, except for expenditure on providing a car.