Draft Finance Bill 2017: Reforming the cash basis expenditure rules
The LITRG broadly welcomes the new capital expenditure rules as we consider they will be helpful for low-earners who may struggle to understand the current tax rules when applying the cash basis to new capital purchases. We consider these new rules will add some simplification while not introducing substantial changes that are likely to disadvantage the self-employed who use the accruals basis to prepare their accounts.
However, as these new rules are being introduced from 6 April 2017, we recommend that clear guidance is provided as soon as possible so that the self-employed can consider whether they are keeping their business records using the cash basis or the accruals basis and also to understand how to account for capital expenditure.
The LITRG submission can be found here: