TRADING INCOME ALLOWANCE
Your Tax Shop in Tameside can confirm that you can now get up to £1,000 each tax year in tax-free allowances for property or trading income from 6 April 2017. If you have both types of income, you’ll get a £1,000 allowance for each.
If your annual gross property income is £1,000 or less, from one or more property you won’t have to inform HM Revenue and Customs (HMRC) or declare this income on a tax return.
If your annual gross trading income is £1,000 or less, from one or more trades you may not have to tell HMRC, however there are circumstances when you must register for Self-Assessment and declare your income on a tax return. Your Tax Shop, Ashton under Lyne can help you decide this.
You must always keep records of this income, which is known as ‘full relief’.
If your annual gross trading or property income, from one or more trades or businesses is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances. However, if you use the allowances you can deduct up to £1,000, but not more than the amount of your income. This is known as ‘partial relief’.
If your expenses are more than your income it may be beneficial to claim expenses instead of the allowances. But always keep receipts!
Gross income means the total amount you would put on your tax return before any allowances or expenses are taken off. This applies whether you use the cash basis or traditional accounting.
However please note there may be circumstances where you choose to complete a tax return even if your income is £1,000 or less.
Should you require any further advice on this new trading income allowance, please contact one of the team at Your Tax Shop based in Ashton under Lyne.