UK: Reforming the cash basis expenditure rules

Posted on Updated on

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 launched another consultation to introduce legislation in Finance Bill 2017. It is proposed to add a new section in the Income Tax (Trading and Other Income) Act 2005. The clause replaces a general prohibition on deductions for capital expenditure in calculating taxable profits using the cash basis, with a more focused and limited prohibition on deductions for certain specified capital expenditure. The new measure will have effect on and after 1 April 2017. The consultation runs to 28 February 2017.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s