What is the cash basis for Self Assessment?
Cash basis is the standard way for sole traders and partnerships without corporate partners to record income and expenses. You only record income when you receive money and expenses when you pay a bill. The alternative is traditional accounting, which records items by invoice or billing date.
Figures checked against gov.uk on . General information, not tax advice.
Why it matters for your bill
Under the cash basis your records determine your profit, so you do not pay Income Tax on money you have not yet received. That helps a business that sends invoices on 30-day terms: an invoice raised in March but paid in April lands in the later tax year.
The cash basis became the default for self-employed people and partnerships from the 2024 to 2025 tax year, with the option to use traditional accounting instead.
Choosing traditional accounting
gov.uk says you can choose traditional accounting. If you do, you must say on your Self Assessment return that you used it, and you may need to make adjustments if you switch from one method to the other.
Limited companies cannot use the cash basis, and gov.uk links to an eligibility checker for the full criteria.