Consultation outcome

Business Income Tax: Simplifying tax for unincorporated businesses

This consultation has concluded

Download the full outcome

Simplifying tax for unincorporated businesses - Summary of responses

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Detail of outcome

The vast majority of respondents to this consultation supported the objective of simplifying the tax system. Some were concerned about the timing of the reform in this consultation and whether businesses have the capacity to adjust to multiple changes at once.

The government has chosen to proceed with two of the measures proposed in the consultation. The measures being taken forward are increasing the entry threshold for the cash basis to £150,000 and simplifying the rules on capital and revenue expenditure within the cash basis to make it easier for businesses to work out whether expenditure is deductible.

In response to stakeholder comments, further consideration is being given to reforming basis period rules and measures to simplify period end reporting requirements.

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

Original consultation

Summary

A consultation covering reform of basis periods for the self-employed, extension of the cash basis and simpler reporting requirements.

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 seeks views on:

  • changing how the self-employed map accounting periods onto the tax year (basis period reform)
  • extending cash basis accounting to larger businesses
  • reducing business reporting requirements
  • reducing the need to distinguish between capital and revenue for businesses using cash basis accounting

Documents

Simplifying tax for unincorporated businesses

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