Updated Bar Council Taxation and Retirement Benefits Guidance

18 July 2013

The Bar Council has launched updated taxation guidance for barristers to help them manage their tax position. This coincides with changes to the tax system introduced by the Finance Act 2013, which received Royal Assent on 18 July 2013.

The seventh edition of the Taxation and retirement benefits guidance has been updated to give advice to barristers on the abolition of the seven year cash accounting rule for barristers and the introduction of a more general cash accounting scheme for small businesses.

The guidance covers details of Her Majesty's Revenue and Customs (HMRC) rules of self-

assessment and updated information on how the incomes of self-employed barristers will be taxed and what deductions will be allowed.

The Finance Act 2013 will also affect how barristers' expenses are taxed. The changes include a new flat rate expenses regime for businesses using cash accounting, as well as new types of flat rate deduction. 

The new changes covered in the guidance are:

  • A new cash accounting and cash basis

  • Abolition of the"seven year rule"

  • Election by barristers for entry into the new system

  • A mandatory rule to leave the new cash basis when receipts exceed twice the amount of the VAT threshold to the earnings basis, and

  • Restrictions on interest charges on business borrowings.