April 2013 Key Messages From the HMRC
16 April 2013
Find out more about how this may have affected your business with HMRC
Simpler Income Tax – Cash Basis and Simplified Expenses
In the Budget statement on 20 March, the Government announced that two new measures - together called Simpler Income Tax – are being introduced to help small businesses to do their income tax.
For the 2013/14 tax year onwards, unincorporated businesses whose income does not exceed the VAT registration limit will be able to choose to work out their tax on the money that flows in and out of their business; this is what is meant by “cash basis”. Using this scheme will mean that these businesses will avoid the need to make year-end tax adjustments, required under current rules that were designed for more complex businesses.
In addition, all unincorporated businesses, no matter what their size, can also choose to use simpler schemes to claim some common business expenses; this is what is meant by ”simplified expenses”.
Further guidance on eligibility and suitability etc will be published on the new Government website, GOV.UK, from 6 April. HMRC will also offer guidance, a webinar and a YouTube video that will help businesses understand and use the new schemes. Look out for our special editorial with next month’s Key Messages, which will have a lot more detail.
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