Methodology to switch to cash basis

Question asked by Marion Nuding 4 months ago

I have recently started using Clearbook free plan in readyness for MDT coming into effect in april 2026.

I need to switch to cash basis - I think it's a requirement, and regardless it makes more sense for a small sole trader such as myself. Can anyone give me some idea of how I'm supposed to switch without doubling up?

For exemple, this year I had a rather large bill which came in in March 25, but that I paid in April 25. It was included in my 24-25 tax return, but Clearbooks sees it as a transaction to be included in 25-26. I'm not going to register for MTD straight away for this reason among a few others, but I want to be ready and I can't quite organise the transition in my head... Clearbooks and MTD aside, if I were to simply use cash basis in my 25-26 tax return I would end up with the same expense twice which can't be right.

Any thoughts?

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Hi Marion,

Any time you switch from traditional basis to cash basis, you will need to make adjustments in the first year. Under MTD, these adjustments can be made via MTD software at the end of the tax year when adjusting your digital record totals to calculate an accurate profit for tax purposes.

Tommy

Best answer
4 months ago

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