Extra earnings HMRC declaration - Advice sought please

IBM01

Hi All,


For the past few years a friend has delivered the odd small training event outside of their normal employment. After seeking advice on the forum and from HMRC these earnings were correctly declared. At first this was via completion of a self-assessment form. Then as the opportunity to deliver the training became less and their earnings fell below the £2500 self-assessment limit, HMRC advised that any extra earnings could be declared in a letter to them. Once declared their tax code was altered accordingly.


This year my friend has been ill for some time and delivered even less training, making their extra earnings very low. To complicate maters if they take into account the normal percentage use of running a car, phone, home office etc. as originally suggested on here and by HMRC, then theoretically they actually show a small loss rather than a profit.


Will they need to inform HMRC of this potential loss or do they just inform HMRC that there has been no profit this year due mostly to illness and reduced opportunity?


Once again any advice gratefully received


Thanks

zygurat789

IBM01 wrote: »

Hi All,


For the past few years a friend has delivered the odd small training event outside of their normal employment. After seeking advice on the forum and from HMRC these earnings were correctly declared. At first this was via completion of a self-assessment form. Then as the opportunity to deliver the training became less and their earnings fell below the £2500 self-assessment limit, HMRC advised that any extra earnings could be declared in a letter to them. Once declared their tax code was altered accordingly.


This year my friend has been ill for some time and delivered even less training, making their extra earnings very low. To complicate maters if they take into account the normal percentage use of running a car, phone, home office etc. as originally suggested on here and by HMRC, then theoretically they actually show a small loss rather than a profit.


Will they need to inform HMRC of this potential loss or do they just inform HMRC that there has been no profit this year due mostly to illness and reduced opportunity?


Once again any advice gratefully received


Thanks

These expenses have to be reasonable, if the income has declined dramatically, it would normally imply that the expenses have also declined.
What expenses have been incurred?

IBM01

Thanks zygurat789,


Apologies for delay, I have been awaiting a reply from my friend to confirm the details. I agree totally with your comment about expenses being 'reasonable'.


Below is what I have ascertained:

• They previously purchased a car to enable them to deliver the training events. They did this via a car loan and was informed that they could claim some of the monthly repayment costs back on a percentage basis relating to how much was business use. They need to repay this monthly regardless of whether any extra work is gained. Previously they did not have a car as they are able to walk or cycle to work. The car does minimal mileage for private use, which can be substantiated by its mileage between yearly MOTs.

• They have professional fees to pay, which are again payable regardless of whether any extra work is gained.

• They have invested in fibre broadband and phone. Again they were advised that a percentage of this could be claimed. Due to the illness and reduced opportunities they haven't been able to deliver much training, but again they needed to have broadband and phone in order that people could contact them with any interest and also so they could update themselves on information relating to their area of training etc.

• In addition they were advised by HMRC that use of a room as a home office could be taken into consideration, again something that remains constant regardless of whether or not work is forthcoming.

I have advised them to speak again with HMRC to clarify the situation, but would welcome any further comments or advice from forum members.


Thanks