Covid zero earnings income tax return ?
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parkerparker
Posts: 39 Forumite
I'm a relative newbie to tax returns. Most of my income is from pensions dealt with by PAYE. I am also a self employed musician. Because of Covid in this current tax year i will earn zero income from music. However I still have expenses and capital expenditure (Depreciation WDA). Do I still complete a tax return (when it is due next year?) even though my earnings for 2020-21 will be zero? Obviously the implication is that if I did complete a tax return, I would receive a welcome tax rebate (due to depreciation etc) on my existing taxable income from pensions.
Thanks in advance.
Thanks in advance.
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Comments
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If you had no income but still had expenses e.g rent, telephone etc you would be making a loss. That loss can be set against your other income which would reduce your tax bill, providing that you have sufficient tax paid, of course.0
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Are you using the cash basis? If so, you can't set a loss against other income, so no refund. All you can do is carry the loss forward to future trading profits of the same trade.
But you don't claim tax relief on depreciation anyway. You claim capital allowances if not on cash basis, or just claim as an expense in year of purchase if on cash basis.0 -
Pennywise said:Are you using the cash basis? If so, you can't set a loss against other income, so no refund. All you can do is carry the loss forward to future trading profits of the same trade.
But you don't claim tax relief on depreciation anyway. You claim capital allowances if not on cash basis, or just claim as an expense in year of purchase if on cash basis.0 -
I don't understand why anyone uses the cash basis. Its logic was simplification, but if you have an adviser, they should arguably do accounts on both bases to see which is best (hardly what you would call simplification), although cash basis is almost always worse.0
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Thanks to all for your comments so far. I pay enough tax to obtain a refund. I have only submitted one tax return (via Accountant) which is 2019-20. And the income was affected by Covid. I will receive a rebate for this year. The depreciation (18%) does result in a rebate if that makes sense (via Capital Allowances) as the capital cost of equipment brought in at the start of this venture is significant. The question I was asking is....do I still submit a tax return even though I will have zero earnings from my Music (self) employment? I expect I am supposed to. I think purdyoaten2 answered this directly. I guess the result will end up that my Accountants fee will end up being more than any tax rebate.........unless I do it myself....?0
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parkerparker said:Thanks to all for your comments so far. I pay enough tax to obtain a refund. I have only submitted one tax return (via Accountant) which is 2019-20. And the income was affected by Covid. I will receive a rebate for this year. The depreciation (18%) does result in a rebate if that makes sense (via Capital Allowances) as the capital cost of equipment brought in at the start of this venture is significant. The question I was asking is....do I still submit a tax return even though I will have zero earnings from my Music (self) employment? I expect I am supposed to. I think purdyoaten2 answered this directly. I guess the result will end up that my Accountants fee will end up being more than any tax rebate.........unless I do it myself....?
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