Sold but not got paid, do I pay tax?

vb3d

If I sell something this financial year but I don't get paid straight away, i.e paid with cheque with future date that is not in the current financial year. Do I still need to declare this as an income for this year because the sale took place in this year?

molerat

A good guide here depending on your accounting procedure http://www.litrg.org.uk/tax-guides/self-employed/working-out-profits-losses-and-capital-allowance/what-is-the-cash-basis

Pennywise

General accounting rule is that, yes, you pay tax on all your sales in a particular year, whether paid for or not, and also similar rules as regards stocks, i.e. only claim the cost price of stocks sold, i.e. add back value of closing stock at year end, and also accruals and prepayments, i.e. if you pay a year's insurance in the last month of the year, you should "prepay" 11/12ths into the next tax year.

If you are a small unincorporated business, you can instead opt to use the simplified cash basis (google for details), in which case you use simply "money in less money out" instead, but there are some restrictions as to what expenses you can claim for.

vb3d

Thank you both