NEW Articles27 Aug 2024
The Advantages of the UK as a Location for a Holding Company
The UK is still an attractive location to site an international holding company
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From 2024/25, restrictions to the cash basis will be removed, making it the default method for calculating trading profit for the self-employed and most partnerships.
The accruals basis is currently the default, with a business having to opt in to use the cash basis. In future, a business will need to opt out of the cash basis if it wants to use the accruals basis.
Restrictions removed
A business, regardless of size, will be able to use the cash basis once the £150,000 turnover restriction has been removed. The removal of two other restrictions will mean there are no longer any obstacles to – otherwise qualifying – businesses choosing to use the cash basis:
When moving from the accruals basis to the cash basis, a number of adjustments may be necessary to avoid double counting or items being omitted.
Pros and cons
The cash basis removes complexities such as accruals and most capital allowances, though it will be unsuitable for some businesses, especially larger ones.
The accruals basis, however, is a more accurate reflection of a period’s trading profit, so banks and other financial institutions may insist on this basis being used.
HMRC’s guide to calculating trading profits, notably section 3 on moving to the cash basis, can be found here.
THE AUTHOR
Manager, Mixed Tax
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