HMRC have published a response to their consultation ‘Simplifying tax for unincorporated businesses’, part of the Making Tax Digital (MTD) package of consultations.
The original consultation contained a number of proposals intended to reduce administrative burdens and introduce more flexibility ahead of the move to a more frequent reporting framework.
In their response HMRC confirm that from April 2017:
- The entry threshold for the cash basis will increase to £150,000
- The exit threshold will be set at double the entry threshold, i.e. £300,000.
- The current general disallowance of capital expenditure will be replaced by a more specific disallowance for certain asset (including those not used up within 20 years).
Draft legislation introducing these measures has been published for comment.
Due to concerns raised during the consultation HMRC have said they will take more time to consider:
- The reform of the basis period rules.
- Simplifying reporting requirements by introducing an optional reduced version of GAAP with fewer adjustments.
Links
Our guides:
Cash or accruals accounting toolkit (subscribers only)
HMRC’s consultation documents can be found here
