Income Tax (Trading and Other Income) Act 2005 section 144A

Chapter not to apply where cash basis used

Section 144A provides that the rules in this chapter (which deal with trade profits and the treatment of certain deductions) do not apply where a trader calculates their profits using the cash basis of accounting.

• This section disapplies the entire chapter for traders who use the cash basis.
• The cash basis is a simplified method of calculating trading profits, based on money received and paid out rather than accruals accounting.
• Where the cash basis is used, none of the provisions in this chapter are relevant to the profit calculation.
• This exclusion was introduced by Finance Act 2013 as part of the wider introduction of the cash basis for small businesses.