Tax Insider Tip: Cash Accounting For Small Businesses: What’s New?
Since 2013/14, certain unincorporated small businesses have been able to choose to use the ‘cash basis’ when calculating taxable income, under which participants are taxed on the basis of the cash that passes through their books, rather than being asked to undertake complex and time-consuming calculations designed for big businesses.
When the scheme was first introduced, small businesses could use the scheme if the aggregate of their cash basis receipts in the previous tax year did not exceed the VAT threshold for the year. However, it was announced in the 2017 Spring Budget that the cash basis threshold would be significantly raised from £83,000 to £150,000. This change has subsequently been enacted by statutory instrument (SI 2017/293) and applies for 2017/18 onwards.
In a recent issue of 'Property Tax Insider’, Sarah Laing looks at the recent increase in the cash basis eligibility threshold and proposed reforms for capital expenditure.
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