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Project objectives 

In the 2023 Autumn Statement, the government announced reforms to cash basis accounting for 2024 to 2025 and future Self Assessment returns . This measure aims to improve and simplify small businesses� experience of reporting in Self Assessment by extending eligibility for the cash basis, encouraging its use where appropriate, and making the rules for the regime easier to understand and apply. �

By setting the cash basis as the default method of calculating trading profits, this measure aims to remove administrative barriers to using the simpler regime and seeks to formalise the behaviour of many businesses that currently use the cash basis without officially electing to do so. This change also aims to calm any concerns that taxpayers may have that the cash basis is not a ‘normal� or ‘proper� way of calculating trading profits. �

The reform will entail: �

• removing the current £150,000 upper limit for business turnover to join the cash basis​ Â�
• setting the cash basis as the default way of calculating profits, with an opt-out for accruals​ Â�
• removing the £500 limit on tax relief available for interest costs in the cash basis​ Â�
• removing the restrictions on loss relief available for cash basis losses Â�
• allowing customers to use different accounting methods for different business incomes 

Customer groups affected 

Existing Self Assessment customers who are using the accruals method of accounting and could now switch to cash basis. 

New Self Assessment customers who are completing a Self Assessment return for the first time. 

This can include:

• self employed Individuals 
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Software providers who provide software enabling customers to record trading income, expenses, losses, etc, to support completing their Self Assessment return. 

What customers will need to do 

What customers need to do as a result of the change. 

Customers who use cash basis as their method of accounting for 2024 to 2025 and future years, won’t need to do anything as cash basis will be the default method on the Self Assessment return. 

Customers who are excluded from using cash basis or wish to use the accruals method of accounting, will need to opt out by ticking a box on the Self Assessment return.  Customers can check to see if they are excluded by checking current guidance. 

How customers will access this service. 

There will be no change to how customers access the service currently. 

When customers need to do this 

Customers will complete this as part of their annual Self Assessment return, within the existing timeframes.

Assessing the impact 

We assessed the equality impacts on all the protected characteristic groups in line with the Equality Act and Public Sector Equality Duty; and Section 75 of the Northern Ireland Act: race, disability, sex, gender reassignment, sexual orientation, age, religion or belief, pregnancy and maternity, marriage and civil partnership, people with dependents and those without, political opinion (for Northern Ireland only) people who use different languages (including Welsh language and British Sign Language). �

There is no evidence to suggest any specific impacts on those customers within any of the protected characteristic groups listed above. The forms are available in accessible formats and in Welsh. Online guidance will be available. Extra support will be provided as required through regular business channels. Unrepresented customers can still seek the services of an agent or representative. Digitally excluded customers can still request a paper version of the Self Assessment return and relevant notes.  

Opportunities to promote equalities  

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group.  

No additional opportunities have been identified.

A full Equality Impact Assessment is not recommended.