Self Assessment Tax Question

FrustratedFlyer67

I know this won't matter until the end of this tax year, but I want to make sure I've got things right in my head for later this year when I will need to declare.

I did a (little bit) of self employed work during tax year ending April 24. Not enough to go over the £1000 threshold to need to declare. The services were provided and invoiced during Feb/March 24 but the payment for the services wasn't received until the end of April 24 (due to systems & administration on their part). 

Does this mean I will need to count that income as part of my income for the tax year ending April 25 or not? 

So basically my question is does the income count from when it was received or from when the services were actually provided and invoiced? 

I did significantly more self employed work this year so will need to declare in any case but want to be sure on whether I should include the above income too, or not. 

Hoping I've put this in the right forum section but feel free to move if not. 
Thanks 

Dazed_and_C0nfused

I may be wrong but the accounting method you use might be important here.

Do you use cash basis or traditional?

FrustratedFlyer67

I'm afraid I don't know what that means. The payments I receive aren't in cash if that helps? They are credited to my bank after an official invoice has been sent out. 

Dazed_and_C0nfused

FrustratedFlyer67 said:

I'm afraid I don't know what that means. The payments I receive aren't in cash if that helps? They are credited to my bank after an official invoice has been sent out. 

Not really sure how you can be running a business without knowing that but this might help.

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-cash-basis

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-accruals-basis

Nomunnofun1

FrustratedFlyer67 said:

I'm afraid I don't know what that means. The payments I receive aren't in cash if that helps? They are credited to my bank after an official invoice has been sent out. 

You really have to know this if in business. Question 8 on the tax return below.

https://assets.publishing.service.gov.uk/media/65fd5a08f1d3a0001d32ad9b/sa103s-2024.pdf

FrustratedFlyer67

Dazed_and_C0nfused said:

FrustratedFlyer67 said:

I'm afraid I don't know what that means. The payments I receive aren't in cash if that helps? They are credited to my bank after an official invoice has been sent out. 

Not really sure how you can be running a business without knowing that but this might help.

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-cash-basis

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-accruals-basis

Thanks for the links. 

So it seems I could elect to use either basis when I sort out my tax return? In which case I would think traditional would be beneficial. 

I haven't needed to prepare the accounts before (or had to declare for the past couple of tax years) so it's not like I'm already using one system or the other. 

Bookworm105

FrustratedFlyer67 said:

Dazed_and_C0nfused said:

FrustratedFlyer67 said:

I'm afraid I don't know what that means. The payments I receive aren't in cash if that helps? They are credited to my bank after an official invoice has been sent out. 

Not really sure how you can be running a business without knowing that but this might help.

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-cash-basis

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-accruals-basis

Thanks for the links. 

So it seems I could elect to use either basis when I sort out my tax return? In which case I would think traditional would be beneficial. 

I haven't needed to prepare the accounts before (or had to declare for the past couple of tax years) so it's not like I'm already using one system or the other. 

then you have the rest of the year to teach yourself accruals accounting if you wish to use the traditional basis correctly

you will also need to positively opt out of using the default cash basis method when doing your tax return 
Cash basis: Overview - GOV.UK

you can swap methods from year to year but make sure you understand how to process the required accounts adjustments to reflect such changes as could get very messy if you have a high transaction volume

Nomunnofun1

Bookworm105 said:

FrustratedFlyer67 said:

Dazed_and_C0nfused said:

FrustratedFlyer67 said:

I'm afraid I don't know what that means. The payments I receive aren't in cash if that helps? They are credited to my bank after an official invoice has been sent out. 

Not really sure how you can be running a business without knowing that but this might help.

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-cash-basis

https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-accruals-basis

Thanks for the links. 

So it seems I could elect to use either basis when I sort out my tax return? In which case I would think traditional would be beneficial. 

I haven't needed to prepare the accounts before (or had to declare for the past couple of tax years) so it's not like I'm already using one system or the other. 

then you have the rest of the year to teach yourself accruals accounting if you wish to use the traditional basis correctly

you will also need to positively opt out of using the default cash basis method when doing your tax return 
Cash basis: Overview - GOV.UK

you can swap methods from year to year but make sure you understand how to process the required accounts adjustments to reflect such changes as could get very messy if you have a high transaction volume

Yes - question 8 will be the complete opposite of how it was posed previously. Hope not too many are caught out. 

https://assets.publishing.service.gov.uk/media/65fd5a08f1d3a0001d32ad9b/sa103s-2024.pdf