Cash basis: keep the invoice date and payment date distinct
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Under cash basis, record income when received and expenses when paid. An invoice can be raised in one period and settled in another, so its date alone does not tell you which reporting total should include the payment.
Rules checked: 28 October 2026, UK. This guide explains the self-employment cash-basis guidance cited below. It does not establish the separate rules for a property business.
This is general information, not financial or tax advice. Rules change, so check GOV.UK or speak to a qualified adviser.
Start with the accounting basis
HMRC: recording income and expenses under cash basis says to record income actually received rather than money still owed, and expenses actually paid. It also explains that cash basis covers payment methods such as card and cheque, not only notes and coins.
Confirm that cash basis applies to the business and period in question. This article does not decide eligibility or the treatment of a business moving between accounting methods. Ask an adviser about that position before reworking old records.
Keep the two dates visible
Take an invented service invoice for £700 issued on 25 March and paid on 15 April. For the simple cash-basis example, the receipt date is 15 April; the invoice date remains useful evidence of the transaction but does not make the unpaid amount received in March.
These facts illustrate timing only. They do not establish how every deposit, refund, asset purchase or unusual payment should be treated. Keep the supporting invoice and payment evidence linked rather than replacing one date with the other and losing the history.
Agree a consistent method
HMRC allows a choice of how you record when money is received or paid, such as an account-entry date or a cheque date. It requires the same method each tax return. Agree the method used in your records and software with the person responsible.
Do not switch between invoice date, bank date and another convention simply because one produces a more convenient period total. If a transaction appears different across documents, record the question and resolve it before submission.
Keep outstanding invoices somewhere useful
Cash-basis recognition does not make an unpaid customer invoice irrelevant to running the business. Keep a separate view of amounts still due so collection work is not lost behind the reporting summary.
Likewise, track unpaid supplier bills without silently treating them as paid expenses. Keep the list of outstanding bills separate from the figures recognised for cash-basis reporting.
Check software meaning before changing entries
Ask which date drives the cash-basis report, how partial payments are represented and how supporting documents remain attached. Use an adviser for uncertain accounting treatment and the provider for the meaning of a screen.
See HMRC: creating digital records for the record format. A digital entry can still use the wrong recognition date; compliant software does not remove the need to understand what was received or paid.
Related reading
Frequently asked questions
Does an unpaid invoice count as money received?
HMRC says to record income actually received, not money still owed. Retain the invoice as evidence and track the outstanding amount separately. HMRC: recording income and expenses under cash basis
Can I change the receipt-date convention whenever it suits a period?
HMRC requires the chosen method to be used consistently from return to return. Resolve the method with your adviser rather than switching opportunistically. HMRC: recording income and expenses under cash basis
Sources
Facts last checked: 18 October 2026.