Consultation outcome

Business Income Tax: Simplified cash basis for unincorporated property businesses

This consultation has concluded

Download the full outcome

Simplified cash basis for unincorporated property businesses - Summary of responses

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Detail of outcome

Almost all respondents to this consultation supported landlords being allowed to use the cash basis, so they only have to declare income if they have actually received it, with many supporting cash basis as the default option for landlords.

The government has accepted this approach and will extend cash-basis accounting so that thousands more will be able to pay tax based simply on the difference between money they have taken in and what they have paid out. For small landlords this will mean paying tax on rent received rather than rent due.

Although a majority of respondents supported having no entry threshold for using cash basis, others felt that the cash basis is not suitable for the largest unincorporated property businesses and that a threshold was needed. The government has therefore decided to include a maximum rental income threshold of £150,000 per property business.

HMRC has published draft legislation together with a tax information and impact note.

Original consultation

Summary

A consultation on the extension of cash basis to landlords.

This consultation ran from
to

Consultation description

Background

At Budget 2015, the Government set out the vision for a transformed tax system and in December 2015 launched the Making Tax Digital Roadmap, outlining more detail about what the transformed tax system will look like by 2020.

Because of the scales of these changes there is a lot we need to ask people about. We have published 6 consultation documents, each focusing on specific customer groups or elements of the Making Tax Digital reforms.

Focus of this consultation

This consultation considers the extension of the cash basis to landlords. Its introduction will ease the transition to Making Tax Digital for those landlords who will be required to report at least quarterly.

This consultation will be of interest to individuals and partnerships of individuals with unincorporated property businesses (landlords), as well as their agents and representative bodies.

Documents

Simplified cash basis for unincorporated property businesses

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If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email different.format@hmrc.gsi.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Published 15 August 2016
Last updated 31 January 2017 + show all updates
  1. Summary of responses published.
  2. First published.