Tax return question

I set up a little Etsy shop last year selling crystals. I spent a lot setting it up and I spent more than I made. 

I didn’t think to register with HMRC as someone told me I didn’t need to do a tax return as I was earning such a tiny amount. Then I wasn’t well during the pandemic with my mental health and it all went out of my head. I then did some reading today and panicked that I should have done a tax return by April this year and now I’ll be fined. I of course was going to do one for this tax year, next April. 

I know I should have registered as soon as I set up my little Etsy shop but I was not very educated on tax and didn’t expect to get many sales anyway. 

Should I have done a tax return before April this year if I set up my shop last July? Will I pay tax if earning such a small amount? 

I’m really not clued up at all on small business taxes so if anyone can give me the basics I’d really appreciate it. I’m going to ring HMRC tomorrow to ask for some advice and I’m quite nervous. 

Replies

  • Dazed_and_C0nfusedDazed_and_C0nfused Forumite
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    When did your business start?  If it was July 2020 then you may need to get a hussle on.

    What was your turnover to the end of the tax year?
  • Savvy_SueSavvy_Sue Forumite
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    If you spent more than you took in, there will be no tax to pay as far as I can see ... 

    Do you have other income on which you pay tax?
    Signature removed for peace of mind
  • LunaDLunaD Forumite
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    When did your business start?  If it was July 2020 then you may need to get a hussle on.

    What was your turnover to the end of the tax year?
    Thank you. Yes it was July 2020. 

    I worked out my finances from last tax years was….

    £4109.57 made on Etsy from July 2020-31st March 2021.


    • Expenses £ 2976.06 (stock, postage and Etsy taxes). 
    • Profit £1133.51.
  • LunaDLunaD Forumite
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    Savvy Sue sorry I can’t tag you. No, I don’t work other then my Etsy business. I wrote above my profit for last text year. 

    Thank you 😊 
  • martindowmartindow Forumite
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    LunaD said:
    When did your business start?  If it was July 2020 then you may need to get a hussle on.

    What was your turnover to the end of the tax year?
    Thank you. Yes it was July 2020. 

    I worked out my finances from last tax years was….

    £4109.57 made on Etsy from July 2020-31st March 2021.


    • Expenses £ 2976.06 (stock, postage and Etsy taxes). 
    • Profit £1133.51.
    The tax year is 6 April to 5 April, so you need to add a few more days to your calculations.  Have you included all of your expenses?  If you drive to he PO then mileage at 45p/ mile is a valid expense.  You may also be able to include as an expense of part of your household and computer expenses. 
    I would have half an hours chat with an accountant to be sure that you are including all that you are entitled to and nothing that you shouldn't!  A lot offer a free initial session.

  • Jeremy535897Jeremy535897 Forumite
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    There is nothing to stop you using 31 March as your year end if you want as tax legislation treats it as if it was 5 April.

    You will need to register as self employed as soon as possible as the time limit was 5 October 2021. See:
    https://www.gov.uk/register-for-self-assessment/self-employed

    Your self assessment tax return for 2020/21 needs to be filed by 31 January 2022.

    It does not matter that you may owe no tax. Do you have no other income at all (like a pension for example)?

    If you have less than full entitlement to the state pension it may be worth paying voluntary class 2 national insurance contributions for 2021/22 onwards.
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