HMRC is encouraging small businesses to use a new ‘cash basis’ scheme that allows them to be taxed on money flowing in and out of their business. The scheme applies to sole traders and other unincorporated businesses with an annual income under £79,000. Businesses must work out the amount of money received in a tax year (minus business expenses). The ‘simplified expenses’ scheme also uses flat rates to calculate unincorporated business expenses such as business vehicle costs, business use of a home and private use of business premises.
HMRC is encouraging small businesses to use a new ‘cash basis’ scheme that allows them to be taxed on money flowing in and out of their business. The scheme applies to sole traders and other unincorporated businesses with an annual income under £79,000. Businesses must work out the amount of money received in a tax year (minus business expenses). The ‘simplified expenses’ scheme also uses flat rates to calculate unincorporated business expenses such as business vehicle costs, business use of a home and private use of business premises.
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