Do I still need to submit an SA return?

vertex

Hi,

Im unemployed (thanks Covid!) but luckily have enough savings to last me 6 months - a year.

Im going to start freelancing and confident I can build up a client base. But over the next 12 months (atleast!) I wont be earning more than £10k. Until I build up a client base or find permanent employed work again.

Because that is lower than my Personal Tax Allowance, do I need to fill in an SA form even though there wont be any tax/NI payments due?

Thanks

Jeremy535897

Yes. See https://www.gov.uk/set-up-sole-trader

Dazed_and_C0nfused

There could be Class 2 National Insurance due.

vertex

Jeremy535897 said:

Yes. See https://www.gov.uk/set-up-sole-trader

So the line that pertains to me under "When you need to set up as a sole trader" is "you earned more than £1,000 from self-employment between 6 April 2019 and 5 April 2020". The answer is no (becuase I was still employed at that point). So I presume next year that line will be updated to read "you earned more than £1,000 from self-employment between 6 April 2020 and 5 April 2021". In which case, I would hope that Id earn more than £1k between now and April! If I dont, I dont need to fill in a SA return. (unless Im reading that wrong?).

Obviously between 6 April 2021 and 5 April 2022 I would certainly have earned more than £1k (unless something drastically goes wrong!) in which case I shall register as a sole trader, keeps records and fill in an SA return.

Am I right in the above?

Jeremy535897

Sounds right to me.

oldbikebloke

the £1k threshold is the "trading allowance" and relates to the gross amount you received from self employment (ie, it is not your profit after deducting costs, it is the total you received before costs)

the rules for registering for SA when self-employed are pretty straightforward:
Tax-free allowances on property and trading income - GOV.UK (www.gov.uk)

Self-employed

If you’re starting a new self-employed business and expect your annual gross income to be no more than £1,000, you may not have to register for Self Assessment but can voluntarily if your gross income for 2018 to 2019 will go above £1,000 and you want to be in Self Assessment.

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

• you’ve made a loss and want to claim relief on a tax return (check helpsheet 227 for more information about losses)
• you want to pay voluntary Class 2 National Insurance contributions to help qualify for some benefits
• you want to claim Tax Free Childcare for childcare costs based on your self employment income
• you want to claim Maternity Allowance, based on your self-employment

You can still use the trading allowance but you’ll need to complete a Self Assessment return using the guidance that helps you fill out the tax return.

If your gross income for a tax year is more than £1,000, you must register for Self Assessment by 5 October in the following tax year. If you’re already registered for Self Assessment, you can use the allowances by deducting them from your gross property or trading income on your tax return. You cannot deduct any other expenses or allowances if you claim the allowances.

vertex

Thanks. 
If I claim Job Seekers allowance, does that affect anything?

oldbikebloke

vertex said:

Thanks. 
If I claim Job Seekers allowance, does that affect anything?

JSA is treated as taxable income so will need to be included when working out your total income for the tax year. 
When your JSA ends, you will receive a P45 from the DWP showing the total they paid you. Don't ignore that, as you really should give the P45 to your new employer.
If you do that, then the P60 you will get at the tax year end from your employer at that date will show your total taxable earnings for the tax year 
if you have not got a new job by 5th April then you will need to total your income yourself including the JSA


As an obvious aside, you can't claim JSA if self employed/freelancing as you are not unemployed ...
You may however be able to claim universal credit if you don't have much savings, but given your opening post refers to savings able to last 6 months, that sounds unlikely.