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Business Tax

Cash basis

  2015/16 2014/15
Entry threshold - turnover up to: 82,000 81,000
Exit threshold - turnover not more than: 164,000 162,000


  1. Unincorporated businesses with annual turnover within the above limits can choose to calculate taxable profits on the 'cash basis' - income received and expenditure paid, rather than invoiced or accrued.
  2. Deduction for loan interest is limited to £500 per year.
  3. Losses can only be carried forward.
  4. Certain businesses are not permitted to use the cash basis, including: farmers using the herd basis, persons using profit averaging, and LLPs.

Flat rate deductions

Item used for business Use per month Deduction permitted
Taxpayer's home 25 - 50 hours
51 - 100 hours
101 hours or more
Taxpayer's car or goods
Up to 833 miles
Over 833 miles
Business premises partly
used as home (Public
House, B&B, small hotel)
1 occupant is
business owner
2 people
3 or more


  1. Unincorporated businesses can also choose the above fixed rate deductions to use instead of calculating the business proportion of actual expenditure.
  2. Use of home deduction covers power, internet, telephone, but not council tax or mortgage interest.
  3. Use of vehicle does not cover finance element of lease or hire purchase costs for vehicle.
  4. Use of business premises amounts are deducted from the actual expenses of running the building so that the personal costs of resident business owners are excluded.