HMRC have published a response to their consultation ‘Simplified cash basis for unincorporated property businesses’, part of the Making Tax Digital (MTD) package of consultations. 

The original consultation proposed extending the existing cash basis for trading income to unincorporated property businesses.

In their response HMRC confirm that, from April 2017:

  • The cash basis will be the default method for unincorporated property businesses with receipts under £150,000.
  • Taxpayers can elect to use the accruals basis instead.
  • A separate decision can be made for each property and trading business of a taxpayer as to whether to apply the cash or accruals basis.
  • The existing cash basis rules for traders will apply with some modifications (in particular on interest deductions)
  • The cash basis will not apply to LLPs, partnerships with corporate members, or trusts.

Draft legislation for inclusion in Finance Bill 2017 has been published for comment.


Our guides:

Cash basis for property businesses

Making Tax Digital: index

Property profits and losses: Adviser guide

HMRC’s consultation documents can be found here