Income Tax (Trading and Other Income) Act 2005 section 331

Income charged

Section 331 establishes how adjustment income is charged to income tax when it arises in a given tax year.

• Tax is charged on the full amount of any adjustment income arising in the tax year.
• Adjustment income typically arises when a business changes its basis of accounting, for example from the cash basis to the accruals basis.
• The charge on the full amount in one year is subject to the spreading provisions in section 334A, which may allow the income to be spread over several years when leaving the cash basis.
• The taxpayer may also make an election under section 334A in relation to how the adjustment income is dealt with on leaving the cash basis.