The threshold for unincorporated businesses will be £150,000.
Legislation will come into force on 6 April, with effect for the tax year 2017/18, which will increase the threshold for the cash basis from £83,000 (cash basis threshold for 2015/16) to £150,000.
The exit threshold will continue to be set at double the entry threshold, so it will increase to £300,000.
Overview
Self-employed and partnerships of individuals with trading income within the cash basis thresholds will be given the choice to use the simplified method of calculating profits.
The government has stated that it is expecting that businesses will save costs because of the reduced complexity due to less detailed records requiring to be kept and a simpler calculation.
Cash basis probably won’t suit a taxpayer if:
- they want to claim interest or bank charges of more than £500 as an expense
- they run a business that’s more complex
- they need to finance the business; a bank could ask to see accounts drawn up using traditional accounting
- they have losses that they want to offset against other taxable income (‘sideways loss relief’).
Article from ACCA In Practice