A big thank you to Mary Jane Campbell - Simpkins Edwards for the talk about cash accounting and tax simplification covering the benefits and drawbacks.

1. CASH ACCOUNTING
Tax Simplification
Mary Jane Campbell
SIMPKINS EDWARDS
Presented at Exeter Business
Network 7th
May 2014

2. A BRIEF LOOK AT…..
Qualification
unincorporated businesses
Money in
Less
Business expenses paid
= taxable profit

3. Flat Rate Allowances
 Also introducing flat rates allowances for
expenses
 Cars – 45/25p/mile, motorcycles 24p/m
 Use of home -based on hours worked
e.g. 25 +hours – £10/month, £51+ - £18
 Private use of business premises e.g.
£350/person/month, 2 people £500 etc

4. Simplified expenses
 Do not have to use simplified expenses
 Simplified expenses also available to
those not cash accounting

5. QUALIFYING
 Cash accounting available for turnover up
to the VAT threshold
 If on Universal Credit, then up to twice
VAT threshold (£154,000 for 2013/14)
 Max qualifying interest claim £500

6. How it works - income
Income
 Record money received for business
sales.
If invoice sent out before year end
But not paid – leave out
If invoice not raised before year end –
leave out

7. How it works - expenses
 Record all business expenses paid in the
year including capital items
 except cars
 Choose flat rate expenses if appropriate
instead of actual costs
 Balance, less capital allowances on cars =
taxable income

8. Benefits
 Simple to calculate
 Get relief for all stock purchases even if
not sold at year end
 Do not pay tax on income not yet received
 Flat rate expenses –reduce record
keeping burden

9. Drawbacks
 Not all business is eligible.
 Interest restriction will impact on
attractiveness
 Election applies to all businesses carried
on by one individual
 Capital allowances not available (except
for cars)
 Business losses can only be carried
forward

10. SUMMARY
Benefits of qualifying
Record keeping simplified
Matches cash-flow
Drawbacks
Qualifying interest restriction
Restriction for use of losses

11. Contact
Mary Jane Campbell
Partner
Mary Jane heads our agricultural and rural
business team, offering clients the benefit of
hands-on experience within the industry alongside
her professional knowledge.
Contact details
E: mjcampbell@simpkinsedwards.co.uk
T: 01392 211233