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Spreading of adjustment income—leaving the cash basis

Where a business leaves the cash basis for businesses from (see B2.111 and B2.112) any adjustment income may be spread over six tax years¹. In each of the six tax years beginning with the one in which the whole amount of the adjustment income would otherwise be chargeable, the amount taxable equals one-sixth of the adjustment income².

A trader may accelerate the charge to tax by electing for any part³ of the outstanding adjustment income to be taxed in a particular tax year⁴. The amount to be treated as income arising in the tax year must be specified in the election⁵. The time limit for the election is the first anniversary of 31 January following the end of the tax year to which it relates⁶. Where an election is made, the calculation for the spreading of the adjustment income for any subsequent tax year is made as if the amount of adjustment income (as reduced by any amounts previously