Great video. Quick question for you please. My wife does my book keeping and I pay her £800 a year l. Can she use the trading allowance for this. This is all she makes self employed.
Sadly we can't advise 1-2-1 here (due to professional regulations and the need to ask a load more questions!), but in general: If she is self employed (and this is her only self employment) and her expenses are under £1000, it may make sense to claim the trading allowance instead of those expenses.
Agree the issue while recording is we don’t use hmrc forms, but third party software that transmits straight to hmrc, so our screen wouldn’t look like yours.
Hi Dan, I am just starting out as a freelance typist. I work from home. 4pm to 10pm Mondays to Fridays. I work for a company who receives dictation from various companies e.g. law firms, and they send out this dictation to me (and other typists) to type up and and return. I then get paid each month. My earnings are based on an audio minute so I only get paid for the minutes I type, which varies daily. I am also working as a "dinner lady" for 1.5hrs per day Mon-Fri on a zero-hours contract basis (I have done this for 3 years now). My question is, do I need to register as self-employed when my income reaches almost £1,000 from BOTH jobs combined, or just when my income from my freelance job reaches almost £1,000? Many thanks!
It depends how the dinner lady income is worked. If it’s an employed job (normally the case) the the £1000 is only relevant for the freelance self employed typist income. Doesn’t matter about the employed job (in majority of scenarios)
Hello . Does the trading allowance apply every tax year or just your first year in business. So in theory your personal tax allowance is £12500 plus £1000 trading allowance before you pay tax. Total £13500. Thanks in advance. 👍🏻
If I earn for example £3000 per annum from self assessment and £25000 from a main PAYE job do I simply take £1000 off my self employed income and declare my turnover as £2000 rather than £3000? So the £1000 trading allowance isn’t detailed on the return anywhere? Thank you
There is a tick box on the return for claiming trading allowance. Bear in mind it replaces actual expenses so might not be a good idea at that level of income - depends how many expenses you have.
my income is less then 1000 but i want to declare tax return because i already registered in self-employed. Was your turnover more than £1,000 in total from all self-employments? so i should say NO? Then submit return.
Its difficult to say as we don't use HMRC software, so not sure what boxes you have. You may find that gives you the answer that 'your not self employed' for the year.
I have 4 jobs 1 is PAYE the other 3 I’m paid as a sole trader. At my PAYE job I earn a small salary of £3250 pa, at my other 3 jobs combined I will earn £13,750 pa. I have very few expenses so when I do my tax return I presume I should be taking the £1000 allowance off my self employed jobs. Does it have to be one of these or do the get lumped together?
This is probably the easiest way to explain: www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance#:~:text=If%20you%20have%20more%20than,allowance%20between%20your%20income%20sources.
Hi, thanks for the video. I'm in the UK with dependant visa. I started a job as a call center representative (It was a contract job). They've told me that I need to set up as a sole trader. I only worked for 5 days and then things didn't go well and I quit. I have not registered as a sole trader yet. My income from this place will be less than £ 1000 and I look for a job as a permanant from now on. I haven't invoiced yet and haven't received a payment from this job. In this case, do I still need to set up as a sole trader (self employment) for these 5 days? I'm really confused. I really be appreciate if you could help me. 🙏
i have made £7000 profit this year, i have had no losses and don't have any outgoings that i need to claim, with this first £1000 being tax free does that mean i will only be paying tax on £6000? Also i am seeing things about not paying tax below £12500 and getting a bit confused, does that mean i shouldn't be paying any tax at all?
Hi Phil, so the £1000 basically replaces your expenses. So when you say £7000 profit, if this is after expenses, consider if the expenses are more than £1000 or not as to whether trading allowance is a good idea. More on this here: www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/ Paying no tax under ~£12.5 is referring to the fact its likely you have a personal allowance. In UK, for most people here means you can earn ~£12.5k a year without paying tax. You usually pay National Insurance before this point however, although the two thresholds are being aligned later this year. This is total income though, so if you have another job this counts towards this limit, as is often using this allowance automatically through the payroll system. It's kinda one 'bucket'.
Thanks for your informative video. What are the conditions to claim this £1k trading allowance ? Many said it’s usually claimed when your self employment is only a side income; but mine is the main and only source of income and I’m providing online consultation services to my clients, can I claim this trading allowance? If yes, can I also claim capital allowance as I’ve bought a phone for my business purpose?
I have a private local authority pension of about 12K per annum. I am about to do my first self employment tax return. Does my pension income affect my trading allowance eligibility?
Question . I’m a barber say I make 25k. Will I pay tax on the full 25k or only 13k as u don’t pay tax unless u make 12k. Does the full thing get taxed or only what’s over 12k?
Hi - I earned £1,100 (and have no expenses) in tax year 22-23 through my “side hustle”. I also have a full time job and pay my tax and NI through my employer. Can I use the £1,000 trading allowance and therefore only pay tax on the £100 over the limit? Any help appreciated, confused! Thanks
Great video and very informative. I subscribed straight away. However I do have a question. I work full time and recently started a side hustle and thought I’d give it a go selling on Etsy, what does this mean for any tax return forms? I’m pretty new to all this and don’t want to get thrown at the first hurdle.
Does the first £1000 only include profit or any income that comes my way? Let’s say I sell a dress for £1000 pounds, but in reality have spent 100£ on materials, 200£ on a sewing machine. So the profit is 1000-300=700. Does that mean I haven’t reached the 1000 limit?
The £1000 'limit' is income / sales. If you did say £1100 sales, but really was only £500 profit, you'd still do a tax return and you might then claim the £1000 deduction instead of your actual expenses, making the taxable profit only £100.
I started Avon on 29th March 2020. I was told to do a tax return even though my sales were a lot less than £1000. I have a full time job and I’m not completing my tax return. I clicked no when asked if my turnover was more than £1000 in my self employment. When I’ve come to the end of the tax return it says “in the year starting 6th April 2019 and ending 5th April 2020 you have told us you were not self employed” Is this correct? The tax return has only asked me about my full time job and nothing about my Avon business
Possibly. Sounds like it's the way the HMRC software is dealing with it. In theory, you wouldnt be self employed if HMRC didnt know you were.... dunno if that makes sense!
Have a watch of this one CAN YOU CLAIM EXPENSES BEFORE YOUR BUSINESS STARTS (SELF-EMPLOYED)? ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-LXwDuAzadsU.html
should you get an accountant, if it's your first time going self employed and you don't really understand the rules and laws or should you only get an accountant for doing the self assessment part
hello thank you very much very good video. I work full time. I have a youtube channel. For 1 year I have an income on RU-vid of 500 pounds. Should I not pay taxes on RU-vid? thank you very much for your reply
Hi there, a lot depends on a few unmentioned things here but it maybe possible to claim the trading allowance and therefore pay no tax on the 500 www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/
From Gov Website. Your tax-free Personal Allowance The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. Just wondering why it says £1,000. Little confusing! Thanks
There are different allowances. A lot of people will have a job earning more than ~£12.5k so they already use this trading allowance against this ‘side hustle’ income.
hi Dan, are you saying that if I am earning a bit more than just a couple of thousand then I should not submit for a trading allowance (as a sole trader)? This is really useful thank you. I find accounting so scary and stressful and yet I don't feel that paying about £400 for an accountant is not really fair for a very small side business and rental property like what I have so trying to do it on my own ahhhh
It’s interesting. You say ‘not fair’ - what do you mean? Think of it like this - would you pay your Barber / hairdresser less because you have less hair? 😄 As a side note, I’d say £400 is cheap (depending on the offer). As you mention, to get the advice and the best tax treatment you need pro help, to which there is an investment cost. I’d say what isn’t fair is our tax system - for those outside of employment it’s crazy complex and to pay the right amount of tax is very difficult. (Without help )
Hi Dan, I have a query if you could please help me? Thank you for the video btw, really helpful. I am a freelance photographer. I first started in 2023, and only made £450ish as I wasn't taking on many jobs. However this tax year I am due to make over £1000. I'm wondering, the £450 I earned last year, would HMRC deduct the 450 from my 'trading allowance' If i register as a business this year? Also one more question, the £1000 trading allowance - can this only be used once? Thank you :)
Hey, so the allowance is per tax year. The way you could think about it is as ‘£1000 of expenses each tax year’. As the allowance effectively replaces your actual expenses.
I hope you could help me. I just started working full time (employed) and receive a salary which falls in the 20% tax bracket. I started tutoring (considered self employment) this financial year and am way below the 1000 trading allowance. Have I understood it right that I wouldn’t need to declare my earnings with HMRC/ register for Self Assessment with HMRC? Thanks for your help, amazing channel btw.
In theory no, but we’d always recommended logging the self employment even if a small profit, you might want the proof of income for something like a mortgage or loan.
Hi I have been self employed for many years. However have been full time employed for the last few years and doing self employed stuff on the side. I have been doing less and less self employed recently and last year earned less than £1000. So effectively I can not submit a return?
If you’ve had a tax return previously they may just issue you one anyway, although you would effectively end of reporting no profit from self employed side.
Hi, some great advice on her but i have a question that I cant seem to find the answer. Im a self employed courier driver and on occasion I would like to hire a driver for the odd day. Do I have to pay their PAYE or can they just invoice me? Thanks in advance for any help
Tough one to answer without full context and situation but it’s not unusual to do that, it just comes down to whether the relationship is one of employment or not. Glad you enjoyed the vid!
So if I make £600 .. register as self employed side hustle and us the simple £1000 allowance-£600 .. could the £400 unused allowance be offset against other income
Hello. My friend and I are looking to start a general partnership (part time alongside fulltime jobs) but trading allowance can only be claimed for sole traders - should we set up as sole traders and work together in order to claim the trading allowance? Thanks 😊
Sorry to say the answer to that would depend on circumstances, both commercially and tax position, so it’s not something we can answer in a comment here sorry!
Hello this video was helpful, I don't really understand much about this since I am 18, I am not employed right now, and I started a Patreon about 4 days ago that is going very well, I started it around 4 days ago and already have around 70 Patrons, and my per month count right now is at about £248, and this is almost inevitably going to go up because how much I have grown my platform and fan base, so I know I will reach that £1000 at some point, so this has been really stressful for me since I am so young and not educated on this at all, would you recommend I set up as a sole trader or a self assessment after I get to that 1000 point or before? I seem to not be very understanding on this and while I feel I am slightly understanding it, I feel a lot of it is going over my head, I appreciate your videos and I have subscribed!
Great news on Patreon count! Its a great platform that one. Sounds like you will be easily going over the £1000 between now and 5th April, so it's likely registering as self employed would be on the cards. We can't tell you exactly without knowing more on your circumstances / professional regulations, but if you needed any guidance you could always get in touch with our team to learn about how we might support you / us learn more about your situation.
I’ve just started doing ebay and I am thinking of going self employed but I and signed of work because of a disability I had from an industrial injury so I get pip benefit and an industrial injury pension for life aswell so how would this work
Its separate, and only works against certain types of income as its effectively like having £1000 of expenses. More here: www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/
We use special software so not sure what boxes you have - just check on the tax calculation page that your self employed income is correct, i.e £700 in that example.
Okay I just commented on another video of yours but I hope I have this sorted! If I already have a full time, non self-employed job and I'm going self employed as a 'side hustle' for the time being. If I earn less than £1000 before end of March (I'm just starting up right now), does that mean I should file a tax return on my expenses? My expenses total about £2000, so that will help me with money off on tax for next financial year?
If your self employed expenses are going to be more than your income and sounds like it would worth doing a tax return in that situation, because you can carry those losses forward, or possibly use against your job income, which may produce a tax refund.
Thanks for the video! So just to clarify: If I have let’s say £12,000 in Self-Employed income, and expenses of let’s say £300, I can simply use my Trading Allowance toward my expenses and effectively deduct £1000 in my Self-Assesment. Is that correct?
@@HeelanAssociates does this effect my gross? Say if I earned 31 grand and wanted to get a mortgage so decided not to claim any expenses does this £1000 to go against me. Say if I wanted to claim a £1000 in expensive befor I would have to put through £5000 in expense. Which would normally turn my 31k into 26k. Is this what's happening here?
Hello thank you for the video. I have a query. I did tutoring for this tax year via an online tutoring company. This company paid me 300£ for the whole tax year. I tried doing the tool onlime to see whether you need to do self assessment or not. What i am confused is the company that paid me is a limited company. I do not own it. The tool asks "Did you work as an off payroll worker" and says this underneath You’re an off-payroll worker (also sometimes called a contractor) if you provide services to a client through an intermediary such as: your own limited company a partnership a personal service company an individual I dunno whether i fit this criteria and have to declare my income. I tutor custoemrs through this tutoring company. I also earn money through my part time job with is paid through PAYE. I have no other self employed income.
While we can't provide direct 1-2-1 advice here due to professional regulations, some general comments: *Off payroll worker - what they are really asking is your effectively a disguised employee, rather than truly a freelance tutor. *Often tutors are self employed, which wouldn't make you generally under the off payroll rules, but doesn't mean it *couldn't* apply (again we don't know your circumstances. *If you earn over £1000 as self employed, and have other income, it's likely you will need to register for self assessment. Hope thats some help.
@@HeelanAssociatesthank you for the quick reply. May you please give any examples where someone would be self employed but count as an off roll pay worker? Thank you.
Please can you talk a little more about pre-trade expenditure? E.g I bought a machine a few years ago which was initially for personal use but will now be used towards products I intend to hopefully make and sell. I have also recently bought other materials and supplies.. how would these pre-trade expenses work in relation to the £1000 allowance?
@@HeelanAssociates can you do a video on expenses that are allowable for tax reduction I have always wondered if you live with parents and work from home but pay them do you get tax reduction for rent to parents ?
Hey, this is a great video. I've just learnt I could have been making it easier for myself! oh well, I know now :) I only just realised I could have claimed the £1k, I thought that was only allowed if you didn't have an employed job, so all good to know. Thankyou for making a clear and easy to understand video!
Thank you for your video. It was really helpful! Can I please ask, do you pay tax on the amount over the £1000 Trading Allowance depending on your PAYE income? For example, if I earned a full-time salary of £40k and earned £1200 through babysitting, would I only pay tax on the additional £200 of self employed income.
If you chose to use the trading allowance that’s right, you’d pay tax on £200. Usually sorted through a tax return. Have a read here www.heelanassociates.co.uk/self-employed-1000-trading-allowance-explained/
