HMRC says cash in with simpler accounting

Simpler accounting

If you have an unincorporated business (e.g. self-employed, sole trader, etc) and have an annual income of less than £79,000, you can consider a new taxation scheme launched by HMRC, which might mean simpler accounting.

The new scheme allows you to be taxed on money that flows in and out of your business, rather than using full, complicated accounting rules, as it involves you simply working out the cash received in a tax year, less any money spent on allowable business expenses.

This means that you won’t need to spend time at the end of the tax year making complex accounting adjustments, and other calculations traditionally designed for larger businesses.

The so called ‘flat-rates’ can be used for the following types of expenses:

  • business costs for vehicles;
  • business use of your home; and
  • private use of a business premises as a home.

The might be welcome news for service providers, such as freelancers, hairdressers, window cleaners, taxi drivers, gardeners, painters and decorators, plumbers and electricians.

More details can be found at www.gov.uk/simpler-income-tax-cash-basis and on simplified expenses at www.gov.uk/simpler-income-tax-simplified-expenses.

 

photo credit: futureshape via photopin cc

Author:

I’m Mary Cummings, a ghostwriter, collaborator and all round word doctor. I help business owners write and publish business books; I'm also passionate about helping creative freelancers find work that they love - their work sweet spot with work on their terms, projects they love and clients who are a dream to work for.

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