The cash basis scheme helps sole traders and other unincorporated businesses benefit from a simpler way of managing their financial affairs. The scheme is currently open to businesses with a turnover of up to £83,000. However, following a consultation on the scheme the government has chosen to make a number of changes. Effective from 2017-18, the entry threshold for the cash basis will be increased to £150,000 and the rules on capital and revenue expenditure within the cash basis will be simplified to make it easier for businesses to work out whether expenditure is deductible. These changes are being made as part of the introduction of Making Tax Digital (MTD) which will begin in 2018. The availability of the scheme will also be extended to landlords with up to 1.8 million property businesses expected to benefit from the savings in administrative burdens.Once a business has entered the cash basis scheme they can continue to report in this way until their income reaches double the threshold which will increase from £166,000 to £300,000. The scheme allows qualifying businesses to use the cash basis when recording income and expenditure i.e. recording the flow of money from and to the business based on actual money flows.Traditional accounting uses the accruals basis i.e. income and expenditure is recorded when a bill is received or a customer is invoiced. The scheme can be used by new or existing businesses although existing businesses will probably need to make some adjustments to move to using the cash accounting basis. The scheme is most suitable for straight forward businesses especially those that provide services.The scheme is not open to limited companies and limited liability partnerships and there is a further list of businesses that can’t use the scheme such as Lloyds underwriters, businesses that have claimed research and development allowance and managed service companies.