Paid in one tax year, work in another - reporting question

KittyKat423

Hello, I'm self employed (sole trader). An organisation wants to pay me for some work before the end of this tax year but have me do the work in May. Do I have to report the income in my self assessment for 2025-26? I'm in Scotland and this work will take me into the next tax band if I have to report it for this tax year, so if I can do it without breaking any rules, I'd prefer to report it in 2026-7, when I actually do the work. Thanks.

molerat

How is your accounting set up - cash basis or accruals ?

That will be the deciding factor on when you must report it.

https://www.gov.uk/simpler-income-tax-cash-basis

JibberdyDacodo

As @molerat says, it depends on whether you use the cash basis or accruals basis.

But, TBH all you'll be doing is pushing the can down the road, as in, why do you think this issue won't occur again next year? Every year you'll be pushing income into the next tax year? What happens if the Gov decide to raise tax rates. you'll pay even more?

LITRG

Hi KittyKat423

We have information on our website which explains how the cash basis and accruals basis works which you may find useful: https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-cash-basis and https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/accounts-traditional-accounting-accruals-basis . Hope this is helpful.