HMRC want small businesses to use (Cash Basis) Scheme
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The ‘cash basis’ scheme can be used by sole traders and other unincorporated businesses with an annual income of less than £79,000 to simplify their accounting processes, saving both time and money.
The scheme involves a business simply working out the cash received in a tax year, less any money spent on allowable business expenses. This means small businesses won’t need to spend time at the end of the tax year making complex accounting adjustments, which can be overkill for many smaller businesses .
Many small businesses are likely to benefit from the simplicity of the cash basis, particularly those providing services, such as tradesmen or builders . In addition, unincorporated businesses can choose to use ‘simplified expenses’. This involves using flat-rates, instead of making complex calculations of actual business expenses. It can be used for the following expenses:
costs for vehicles
and the use of your home
private use of a business premises as a home.
HMRC’s Carol Lunney said: “The cash basis and simplified expenses schemes can help save small businesses time and money. With a new tax year on the horizon, now is the time to start thinking about them. So, if you’re eligible, go online and find out more about the schemes at GOV.UK.”