What if a transaction spans two different years? Follow the money!

Remember the tax year runs from 6 April to the following 5 April. So the 2023/24 tax year runs from 6 April 2023 to 5 April 2024.

Imagine you invoice a client on 1 March 2023, and they pay you on 1 May 2023. 5/6 April is in the middle of this. You've invoiced in one tax year, and been paid in the other one. Which year should it be in?

Meanwhile, you're renting out a property and paying landlord insurance for 12 months starting on 1 January 2023. Do you need to apportion it?

And you've bought a £720 phone and are paying £30 a month over two years. Do you claim £720 or £30 each month?

The good news is that untied helps you follow the rules as simple as possible. For tax purposes, you can just look at when the cash comes in or out. Simply find the relevant money in or money out and tag it.

Just follow the money!

Job done!

(HMRC calls this the "cash basis" and it is allowed as long as you're turning over under £150,000 for your business or property activity. The term for adjusting money between years is called the "accruals basis" though HMRC sometimes call it the traditional basis or standard basis.

So long as you're below the threshold, we like to keep it simple and untied only supports the cash basis - we follow the money. Normally it won't make any difference overall in your tax position - but there may be cases when one method or another would result in less tax. Sometimes you don't know which was better until it's too late, and for most self-employed people the extra admin and likely cost of needing an accountant to look at the options each year will be greater than any benefit of switching. That's why we like this simplification.

If you buy a high price item such as a van then there are options around capital allowances that get more complicated. Again you may need an adviser to help you.)