Cash basis option for landlords

Source: HM Revenue & Customs | | 08/01/2019

The cash basis scheme helps sole traders and other unincorporated businesses benefit from a simpler way of managing their financial affairs. The scheme was extended to landlords from April 2017. The scheme is not open to limited companies and limited liability partnerships. The entry threshold for the cash basis scheme is £150,000 and you can stay in the scheme until your business turnover reaches £300,000.

Unlike other taxpayers that need to opt-in to use the scheme, the legislation assumes that landlords will use the cash basis as the default method of calculation. A landlord can still elect to opt out of the scheme, in which case they can continue to use generally accepted accounting practice (GAAP) to calculate their taxable profits. Landlords are also required to continue using GAAP if their rental receipts are in excess of the £300,000 scheme threshold.

The cash basis scheme allows landlords to use the cash basis when recording income and expenditure i.e. recording the flow of money from and to the business based on actual money flows. Traditional accounting uses the accruals basis i.e. income and expenditure is recorded when a bill is received, or a customer is invoiced.



 

Latest News

On your e-bike
11/06/2019 - More...
The Cycling Minister, Michael Ellis, has announced a number of changes to the Cycle to Work scheme in an announcement

HMRC cancels penalties charged to 6,000 families
11/06/2019 - More...
The High Income Child Benefit Charge (HICBC) was introduced in January 2013 and applies a charge to taxpayers whose

HMRC blocks phone fraudsters
11/06/2019 - More...
Fraudsters have been blocked from using HMRC’s most used helpline numbers after the introduction of new defensive

Search News


Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login