Just over a thousand pounds

Hoolibooli

Can anyone put me straight on my tax return, I am retired but still do a small amount of online graphic work. Over the last five years the amount earned has dropped below £1,000 and as my tax return asks me if my earnings are that or less this has led to no tax paid. However this year much to my surprise my earnings have just busted £1,000. Do I declare it all and pay 20% on all of it or is it just the spill over, sorry to be so naive.

Dazed_and_C0nfused

Hoolibooli said:

Can anyone put me straight on my tax return, I am retired but still do a small amount of online graphic work. Over the last five years the amount earned has dropped below £1,000 and as my tax return asks me if my earnings are that or less this has led to no tax paid. However this year much to my surprise my earnings have just busted £1,000. Do I declare it all and pay 20% on all of it or is it just the spill over, sorry to be so naive.

You pay tax on your profits, whether they are £1 or £1,001.

There is no rule which means you don't pay tax on profits that are less than £1,000.

Or do you mean you claimed the trading allowance which meant you had no profit (in the previous years)?

If so why wouldn't you claim it again for 2024-25 (assuming that is the tax year you are referring to).  Assuming you don't want to claim any actual expenses of course.

Bookworm105

yes your "small amount of online graphic work" is classed as self employment (SE) and therefore your profit is taxable

as a concession HMRC says that if your gross income from SE is less than £1,000 then you have zero taxable profit because they give you a £1,000 trading allowance (which is in addition to your £12,570 personal allowance) and thus do not have to declare that income unless required to submit a tax return for another reason - ie the fact your are getting a pension that has not been taxed un der PAYE

so your overall tax position is:
pension income + taxable SE profit - personal allowance (12,570) = net income which will be taxed at 20%

as you are SE, you therefore have the choice when calculating your profit of selecting:
Either: gross SE income - trading allowance £1,000 = taxable SE profit 
Or: gross SE income - actual expenses/costs = taxable SE profit