When the cash basis scheme may not be suitable
23/06/2020

The cash basis scheme helps many sole traders and other unincorporated businesses who benefit from a simpler way of managing their financial affairs. The scheme is not open to limited companies and limited liability partnerships. The scheme allows qualifying businesses to use the cash basis when recording income and expenditure. However, some small businesses are more suited to using the cash basis than others.

If a business falls within any of the following categories, the cash basis may not be the best option:

  • want to claim interest or bank charges of more than £500 as an expense
  • run a business that is more complex, e.g. have high levels of stock
  • need to obtain finance for the business - a bank could ask to see accounts drawn up using traditional accounting to see what the business owes and is due before agreeing a loan
  • have losses that the owner wants to offset against other taxable income (sideways loss relief)

In a nutshell, the scheme is most suitable for straight forward businesses especially those that provide services. Businesses must have a turnover of £150,000 or less to join the scheme and can continue using the scheme until the business turnover reaches £300,000.


App2
brayshawQRCode

DOWNLOAD APP TODAY

Enjoy the Brayshaw Morey App with our compliments by downloading it for free via our QR code.

CONTACT US

Fraser Ross House
Fraser Ross House, 24 Broad Street, Stamford, Lincolnshire, PE9 1PJ
Contact Us: info@brayshaw-morey.co.uk
Call Us 01780 750840

SEE LOCATION ON MAP

xero transparentfreeagent trans  CPAA