This video outlines the main points relating to small trader income and how it is viewed by HMRC.
Small trader relief
Great news, from the 6th of April 2017, there is something called a small trader relief of a thousand pounds. There’s also a thousand pounds property income relief. Trade can be buying and selling things on eBay or simply just a bit of self employment. Property income might be the odd nights of the Airbnb or the odd lodger popping in and out. What does this mean? If you only had a turnover of a thousand pounds, you don’t have to declare it on your tax return. You just tick the box to say you’ve had a thousand pounds of income and that’s it. Nothing else needs to be done.
So why’s that good news? Well the odd bit of PA work you might want to do, the odd bit of filming. You might think about running some videos through for somebody. A little tiny bit of trading on eBay won’t hurt anybody. Well that’s the view of HMRC as well. Why do they want to chase down small amounts when there’s bigger fish to fry? Now there is a slight problem with that. You might have a thousand pounds worth of income but how much did it cost you to generate that income? Did you buy and sell on eBay but you sold at a loss? If so, this does not allow you to offset any costs and therefore create losses.
You have to think about, was it just income and there was no costs incurred? Or should I really declare this as a self employed business. You could earn more than a thousand pounds but have very little costs. What you can do then, you can elect to have that thousand pounds allowance, offset it on your more than thousand pounds income and just pay tax on the difference. There’s an example below this video on how this works. Where I’ve assumed somebody’s rented their driving space or their parking space for Wimbledon. See how it works and how much tax they could save if they use that election. A thousand pounds of self employed odd income, a thousand pounds of odd property income, no declaration. Keep it tax free and laugh your way to the bank. Give us a bell if you need help on it. Thanks.