Business Partnership help - do we need to submit tax return if no expenses and each earned only £250

susfloos

My friend and I registered as a business partnership last year. I was sent the self assessment tax return paperwork for 2020/21 for the partnership and for myself as a sole trader forming one half of the partnership. In that period we only earned 500 (so 250 each as no expenses) which I believe is under the 1000 self employed tax free allowance (whatever that’s called). I am wondering though, because we are a partnership are we excluded from this tax break? Do we need to file a tax return? Any advice most appreciated.
susie 

[Deleted User]

You need to fill in the form as it has been issued. In addition both partners have to file a self-assessment tax return and complete the partnership pages which are supplementary I.e. NOT the self- employed sections.

MalMonroe

Yes. Because once you are registered you are on the radar. You're then expected to complete tax returns. I started my own small business last year but earned nothing - long story, family circumstances intervened - but still had to complete a tax return. When I logged on to my HMRC record online after I'd submitted my return, it said 'you do not have to pay any tax this year' - because my income remains below the Personal Allowance.

For all HMRC knows, you could have been earning thousands. Once you're on the record, you have to jump through the hoops. It's all for the best in the long run though to just be open and above board. 

susfloos

Thanks for this. I suspected this. So we have to do the form, but probably won’t have to pay the tax?

[Deleted User]

susfloos said:

Thanks for this. I suspected this. So we have to do the form, but probably won’t have to pay the tax?

On the partnership return you would declare £500 income and claim £500 trading allowance . The profit is Nil. On the individual returns you declare NIL profit each on the partnership (short) section.

Jeremy535897

[Deleted User] said:

susfloos said:

Thanks for this. I suspected this. So we have to do the form, but probably won’t have to pay the tax?

On the partnership return you would declare £500 income and claim £500 trading allowance . The profit is Nil. On the individual returns you declare NIL profit each on the partnership (short) section.

The trading allowance does not apply to partnership trades: section 783AA(1) ITTOIA 2005.

[Deleted User]

Jeremy535897 said:

purdyoaten2 said:

susfloos said:

Thanks for this. I suspected this. So we have to do the form, but probably won’t have to pay the tax?

On the partnership return you would declare £500 income and claim £500 trading allowance . The profit is Nil. On the individual returns you declare NIL profit each on the partnership (short) section.

The trading allowance does not apply to partnership trades: section 783AA(1) ITTOIA 2005.

Indeed - perhaps time to leave the advice to those who actually keep up with the legislation? 

Jeremy535897

[Deleted User] said:

Jeremy535897 said:

[Deleted User] said:

susfloos said:

Thanks for this. I suspected this. So we have to do the form, but probably won’t have to pay the tax?

On the partnership return you would declare £500 income and claim £500 trading allowance . The profit is Nil. On the individual returns you declare NIL profit each on the partnership (short) section.

The trading allowance does not apply to partnership trades: section 783AA(1) ITTOIA 2005.

Indeed - perhaps time to leave the advice to those who actually keep up with the legislation? 

I don't think anyone could do that across all the taxes. Most of your posts are spot on. Indeed, the reason I quoted the legislation was that I was disagreeing with someone who is normally right, and so I checked the legislation out for myself to make sure I was not missing something.

Posting on this forum has taught me that is usually the things I am sure I know that I get wrong. That's why I search everything, but I still get it wrong sometimes.