UK: Increasing cash basis thresholds for unincorporated businesses

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At Budget 2016, the government announced that it would explore options to simplify the tax rules for businesses, self-employed people and landlords. A consultation covering 4 discrete areas of simplifying tax paid by unincorporated businesses, including reforming the capital/revenue divide in the cash basis and simplified cash basis for unincorporated property businesses, was published on 15 August 2016 and ran until 7 November 2016.

On 31 January 2017, HMRC announced that legislation will be introduced in Finance Bill 2017 to increase the threshold for the cash basis from £83,000 to £150,000. The exit threshold will continue to be set at double the entry threshold, so it will increase to £300,000.

The entry and exit threshold for self-employed Universal Credit claimants will continue to equal the exit threshold of non-Universal Credit claimants and will increase to £300,000. The measure will have effect on and after 6 April 2017.

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