Income Tax (Trading and Other Income) Act 2005 section 31B

Relevant maximum

Section 31B sets out the conditions under which a "relevant maximum" applies to a trade, profession or vocation for the purposes of the cash basis, and specifies the amount of that maximum.

• A relevant maximum applies where the person was not using the cash basis in the previous tax year, or where total cash basis receipts exceeded £300,000 (or double the VAT threshold) in the previous year, including cases involving controlled firms.
• The relevant maximum is the higher of £150,000 or the VAT threshold, or for universal credit claimants, the higher of £300,000 or double the VAT threshold.
• The monetary amounts and VAT threshold are proportionately reduced where the basis period for the tax year is shorter than 12 months.
• The Treasury may amend this section by order, but any change that restricts eligibility for the cash basis election requires approval from the House of Commons.