Langham Walsh

Extending the “Income tax cash basis” for the self-employed

Talk to an expert

This HM Revenue & Customs (HMRC) consultation seeks views and feedback on proposals to increase eligibility and use of the income tax cash basis for the self-employed. These proposals aim to increase the number of businesses able to benefit from the simplifications the regime offers, making the rules easier to apply and understand, and to help businesses spend less time filing their tax returns.

What is income tax cash basis?
The cash basis is a simplified regime for calculating taxable profits for businesses with straightforward tax affairs. The regime allows businesses to calculate their taxable profit as the difference between income and expenditure when money is actually received or paid out. This eliminates accounting and tax complexities such as accruals and most capital allowances and simplifies reporting.

There are four policy proposals
The consultation will focus on the four following policy proposals, but welcomes other ideas:

  • increasing the turnover thresholds for businesses to use the cash basis;
  • setting the cash basis as the default, with an opt-out for accruals;
  • increasing the £500 limit on interest deductions in the cash basis; and
  • relaxing restrictions on using relief for losses made in the cash basis.
    Who should respond to this consultation?

HMRC would like to hear from businesses, particularly self-employed businesses that use or would be eligible for the cash basis, their advisers, representative bodies, software providers, and other interested parties.

See: Expanding the cash basis - GOV.UK (www.gov.uk)

March 24, 2025
No change to Bank of England base rate

The Bank of England held its regular meeting to discuss interest rates last Thursday.

Read article
March 20, 2025
Safe working with screens: What employers need to know

The Health and Safety Executive are reminding employers about their responsibilities to protect workers from the health risks that come from working with display screen equipment (DSE), including PCs, laptops, tablets and smartphones.

Read article