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What is Accruals basis?
Last verified 31 October 2026
The accruals basis is a way of working out profit by counting income and costs in the period they belong to, not the day money moves. HMRC's Property Income Manual treats it as the alternative to the cash basis and ties it to generally accepted accounting practice.
Why it matters to landlords
Since 2017 to 2018 the cash basis has been the default for most individuals and partnerships whose property receipts are £150,000 or less, so many landlords never meet accruals. You must use it if receipts go over £150,000 in a tax year, or if the business is run by a company, an LLP or trustees. An individual can also elect for it, within one year of the filing date for that tax year.
Under accruals, rent that fell due in a period is income of that period even if the tenant pays late, and expenses are matched to the period they relate to. A deposit you keep at the end of a tenancy becomes income at that point. Under the cash basis you ignore what is owed to you or by you and count only money received and paid in the tax year.
Example
Priya lets a flat at £950 a month. The March 2027 rent fell due on 1 March but the tenant paid on 8 April 2027. On the accruals basis that rent belongs to 2026 to 2027. On the cash basis it counts in 2027 to 2028, because that is when the money arrived.
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