Self Employed full 11 - Your turnover

Coronavirus support payments

If you received any payments from the Self-Employment Income Support Scheme, include them in the new SEISS box on page 2 of the 'Other tax adjustments' section, not here.

If you received any other coronavirus support payments, include them in the 'Any other income' box, not here.

Traditional accounting (accruals basis)

Turnover consists of your total sales, takings, fees or money earned by your business for the period up to the date your books and accounts are made up to.

Turnover includes:

• cash or cheque
• fees, tips and commissions
• the value of any payments 'in kind', that is not payment by cheque or cash, for work done or goods sold

It's the money due to you up to your end of the tax year, 5 April 2021 - whether or not you have actually been paid.

Cash Basis Accounting

You can use cash basis if you:

• run a small business, for example, sole traders and partnerships
• have an income of £150,000 or less a year, or £300,000 if you claim Universal Credits

You can also decide not to use cash basis if it is not suited to your business.

Income and expenses under cash basis

In cash basis accounting you only count the money you've actually received and expenses you've paid up to your end of tax year, 5 April 2021 - money you're owed is not counted until you receive it.

Capital allowances

If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.

Losses

• any losses you make cannot be set off against your other income
• terminal loss must be set against any profits (after deducting losses brought forward) from the same business taxed in the tax year 6 April 2020 to 5 April 2021
• any remaining terminal losses must be set against the profits of the same business taxed in the 3 prior years. Starting with the latest year

Other considerations

• businesses using traditional accounting (accruals basis) might have to make some adjustments if they switch to cash basis
• you can choose how you record when you receive or pay money, for example, the date the money enters or leaves your account or the date a cheque is written, but you must use the same method each tax year
• a loss incurred by a business adopting 'Cash basis' can only carry forward. No sideways or earlier year's tax relief can be claimed
• your business grows during the tax year you can stay in the scheme up to an income of more than £150,000, or £300,000 if you claim Universal Credits. Above that you'll need to use traditional accounting for your Income Tax return for the next tax year

Further guidance on cash basis Cash basis.

For Guidance on trading income allowance go to Tax-free allowances on property and trading income.