Cash basis and simplified expenses

Cash basis and simplified expenses


Cash basis and simplified expenses are
two simpler income tax schemes which can be used instead of traditional
accounting rules to make life easier. The first scheme, cash basis can be used if
you’re a small unincorporated business or partnership whose business income in
a tax year is no more than the VAT registration threshold.
You’ll only be taxed on the money that comes in and goes out of your business
during the tax year which will save you having to spend time at the end of the
year making the adjustments and calculations more appropriate to large
or complex businesses. The second scheme is simplified expenses
it can be used by all unincorporated businesses regardless of what their
income is and whether or not they’re using cash basis.
But what are simplified expenses? Well where an item is used both privately and
for business working out the amounts you can claim as an allowable business
expense can sometimes be difficult and time-consuming. So instead of having to
work out the actual business related proportion of your overall costs from
receipts and bills, you can use a flat rate to cover business costs for
vehicles, using your home for business
and business premises that are also used as the family home. You can find out more
about these schemes on GOV.UK

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