Quick Question re Self Assessment

AntiquesLady

Hi

I was just wondering if you could double check some advice I have received off the self assessment helpline today (I don't trust HMRC!)

I registered as a sole trader for my small ebay business in February this year. They have told me today as I haven't earned over £1,000.00 yet I don't need to file a self assessment BUT I also have a full time job and my personal allowance is taken up with that.

Also, I have incurred quite a few expenses buying stock so what happens to that? Do I just lose it all - this totals over £2,000.00.

I wasn't sure this advice was right so I thought I would double check, I couldn't find anything on their own website.


Thanks!

pramsay13

It doesn't matter that you have a full-time job you only have to complete a self assessment and pay tax if you earn over £1000.
If you have made a loss you can carry that forward and offset against tax paid on future earnings.

AntiquesLady

Thank you Pramsay.


So I would just put it down as "loss brought forward from earlier years set off against this year's profits" in next year's tax return.


I have all the figures anyway because I had drafted a paper version of my self assessment intending to input it online. It was only when I couldn't find the SA103 I had to ring them and then found out I didn't have to complete. Oh well, at least it is practice for when I have a full 12 months instead of 2 months under my belt.


Thanks again.

sheramber

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

You must register for Self Assessment and declare your income on a tax return when:

you!!!8217;ve made a loss and want to claim relief on a tax return (Help Sheet 227 has more information about losses)

00ec25

there are 2 distinct issues here, they are mutually exclusive:

1. Your income is from (ebay) trading, therefore you can claim the £1,000 allowance against income which, given you told HMRC you would not have income above that level, means:
"Where the allowance covers all of an individual's relevant income (before expenses) then they will no longer have to declare or pay tax on this income."
https://www.gov.uk/government/publications/income-tax-new-tax-allowance-for-property-and-trading-income/income-tax-new-tax-allowance-for-property-and-trading-income

also see first bullet point
https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return


In contrast:

2. You do not wish to claim the 1,000 allowance but instead you wish to claim 2,000 of expenses and therefore calculate a profit (ie loss) under the normal method of income - expenses = taxable profit (loss)
You wish to register that loss and "use it"

To register a loss you must do so by submitting a tax return as per Sheramber's link above. To claim a loss outside of a tax return there are only a few specific circumstances where you can do so - see section 8:
https://www.gov.uk/government/publications/losses-hs227-self-assessment-helpsheet/hs227-losses-2017