Part 2

Trading income
Chapter 3

Trade profits: basic rules

Basis of accounting

Election for profits to be calculated in accordance with GAAP
25C
1
A person who is or has been carrying on a trade, other than an excluded trade, may elect for the profits of the trade to be calculated in accordance with generally accepted accounting practice (instead of on the cash basis).
2
An election made in relation to a trade under
subsection (1)
has effect—
a
for the tax year for which it is made, and
b
for every subsequent tax year (subject to
subsection (3)
).
3
An election made in relation to a trade under
subsection (1)
ceases to have effect if—
a
the trade is an excluded trade in relation to a tax year, or
b
the person who is or has been carrying on the trade, other than an excluded trade, elects to calculate its profits for a subsequent tax year on the cash basis.
4
Subsection (3)
does not prevent an election being made under
subsection (1)
for any subsequent tax year.
5
For the meaning of “excluded trade”, see
section 25B
.
S. 24A and cross-heading inserted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 2, 47 (with Sch. 10 paras. 48-50)
S. 25C inserted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 5, 47 (with Sch. 10 paras. 48-50)