Small Trader Relief

Small Trader Relief

A new tax allowance was introduced from April 2017 (called small trader relief) that not many people know about, so if you have a small amount of self employed income or even rental income, you may want to make use of it for 2017/2018, or evening 2018/2019 as it still exists – I know, jumping ahead, but you will need to keep appropriate records. What is this new allowance? I hear you say. Listen up

Transcript of the Video

Great news. From the new tax year, on the 6th of April, 2017, there is something called a small trader relief of £1,000. There’s also a £1,000 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 Airbnb, or the odd lodger popping in and out.

What does this mean?

So if you only had a turnover of £1,000 in that tax year, you don’t have to declare it on your tax return. You just tick the box to say you’ve had £1,000 of income, and that’s it, nothing else needs to be done.

So, why is that good news?

Well, the odd bit of PA work you might want to do. The odd bit of filming that 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, in that you might have £1,000 worth of income, but how much does 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. So you’ll have to think about, was it just income, and there was no costs incurred? Or should I really declare this as a kind of self employed business.

You could earn more than £1,000 but have very little costs. So what you can do then, you can elect to have that £1,000 allowance. Offset it on your more than £1,000 income, and just pay tax on the difference.

There’s an example below this video on how this works, where I’ve assumed somebody has rented their driveway space, or their parking space for Wimbledon. See how it works, and how much tax they could save if they used that election.

The Woo Hoo moment

So, £1,000 of self employed odd income. £1,000  of odd property income. No declaration, keep it tax free, and laugh your way to the bank.

Want to know more?

If you want to wade through a chunk of HMRC/Gov details, you can find it by clicking >>> HERE <<<.

Give us a bell if you need help on it.

 

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