The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The simplified cash basis for small businesses (hereafter referred to as the ‘cash basis’) is a simplified form of accounting. It is intended to make the calculation of trading profits easier by accounting for income and expenditure based on money received from customers and money paid to suppliers. See Simon’s Taxes B2.112.
A person can elect for the cash basis to apply if their cash basis receipts do not exceed £150,000 (£300,000 for universal credit claimants) and they are not otherwise excluded ― see below.
The thresholds (referred to in the legislation as the ‘relevant maximum’) are reduced if there is a short basis period. They are not however similarly increased for long basis periods.
Where an individual is controlled by a partnership or where a partnership is controlled by an individual, the threshold limits apply to all trades carried on by the individual or partnership in a tax year. A person controls a partnership if he has the right to more than one half of the assets or income of the partnership. If two partners own a partnership equally, there is no controlling partner. For non-controlling partners, whether they are in a partnership with a controlling partner or not, only the cash basis receipts of their separate sole trades are aggregated to establish eligibility to use the cash basis for those trades. It does not matter whether the partnership also uses the cash basis or not.
A business must leave the cash basis in the tax year following the year in w
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Why capital losses are importantCapital losses are usually set against the capital gains that arise in the same year as the loss, reducing the total taxable gains for that year. Losses not used in this fashion are normally carried forward to be set against the next available gains.However, in
Working rule agreements are used in the construction industry and similar areas. They are national agreements made between trade unions and employers across the country, setting out the terms and conditions that apply to particular categories of hourly paid manual workers. The workers concerned are
Why defer a gain?An individual’s net taxable income and chargeable gains for the tax year influence the rate of tax payable on their capital gains. See the Introduction to capital gains tax guidance note.Depending on the nature of the asset disposed of, this can result in the individual paying
When does a trust come to an end?A trust may come to an end because it has run its course and comes to a natural end. If a trust has no assets , it ceases to exist. Alternatively, a trust ends because the trustees or beneficiaries decide to wind it up: the trustees distribute the assets by