HMRC to increase trading allowance to £3000

soolin

It looks like the trading allowance is going to be raised from £1000 to £3000 in a future year.

Threshold for filing ‘side hustle’ tax return to rise to £3,000 in UK

This article doesn't give a date, but I've seen dates as early as 26-27 being suggested.

SimonFF

Non-paywalled here:

https://archive.is/mISAY

Purple_Jumper

I read it as the need to complete a tax return was raised to earnings above £3,000 but that tax was still due on anything above £1,000 ie only the reporting threshold had increased.

Per the www. gov.co.uk website government/news/boost-for-side-hustlers-as-300000-people-to-be-taken-out-of-tax-returns-government-announces (sorry I am unable to post the link)

"This will benefit around 300,000 taxpayers. An estimated 90,000 of them will have no tax to pay and no reason to report their trading income to HMRC in the future at all. Others will be able to pay any tax they owe through a new simple online service"

Spoonie_Turtle

Purple_Jumper said:

I read it as the need to complete a tax return was raised to earnings above £3,000 but that tax was still due on anything above £1,000 ie only the reporting threshold had increased.

Per the www. gov.co.uk website government/news/boost-for-side-hustlers-as-300000-people-to-be-taken-out-of-tax-returns-government-announces (sorry I am unable to post the link)

"This will benefit around 300,000 taxpayers. An estimated 90,000 of them will have no tax to pay and no reason to report their trading income to HMRC in the future at all. Others will be able to pay any tax they owe through a new simple online service"

https://www.gov.uk/government/news/boost-for-side-hustlers-as-300000-people-to-be-taken-out-of-tax-returns-government-announces

Well spotted!


This article makes the distinction a bit clearer: https://www.ipse.co.uk/articles/explained-hmrcs-new-3-000-self-assessment-threshold-for-side-hustles

Also, "This will benefit around 300,000 taxpayers. An estimated 90,000 of them will have no tax to pay … "  - is it just me or is this tricksy wording making it sound like this is a change, an effect of changing the self-assessment threshold?  Because it's already the case that not everyone having to declare income pays tax, and this is just an admin change rather than a change to the actual trading allowance.

horsewithnoname

It’ll be because there aren’t the resources to deal with it. 

Langerhan

They're not increasing the personal allowance, just the reporting threshold for Self Assessment - so instead of registering for Self Assessment, you'll just have to fill in an online form or something instead. It's a non-story.

RFW

horsewithnoname said:

It’ll be because there aren’t the resources to deal with it. 

That and the fact there's not much money in it anyway. Even if it's all profit it doesn't raise that much revenue. Some low turnover sellers may end up getting rebates if they started doing proper accounting. My first visit to an accountant after doing my own accounts for a few years ended up with me getting quite a large rebate.

Dazed_and_C0nfused

Langerhan said:

They're not increasing the personal allowance, just the reporting threshold for Self Assessment - so instead of registering for Self Assessment, you'll just have to fill in an online form or something instead. It's a non-story.

This hits the nail on the head.

No difference whatsoever to the tax payable, just a different way of dealing with it.  For some people.

the_lunatic_is_in_my_head

Purple_Jumper said:

I read it as the need to complete a tax return was raised to earnings above £3,000 but that tax was still due on anything above £1,000 ie only the reporting threshold had increased.

How is anyone going to pay the tax if they don't have to report the income?

I read the article as saying 300,000 people have a "side hustle" bringing in more than £1000 and by increasing the threshold 90,000 people who were previously reporting income of between £1000 and £3000 will no longer declare / pay tax, the other 210,000 with turnover over £3000 will continue to have to file self assessment and pay any tax that may be due. 

Dazed_and_C0nfused

the_lunatic_is_in_my_head said:

Purple_Jumper said:

I read it as the need to complete a tax return was raised to earnings above £3,000 but that tax was still due on anything above £1,000 ie only the reporting threshold had increased.

How is anyone going to pay the tax if they don't have to report the income?

I read the article as saying 300,000 people have a "side hustle" bringing in more than £1000 and by increasing the threshold 90,000 people who were previously reporting income of between £1000 and £3000 will no longer declare / pay tax, the other 210,000 with turnover over £3000 will continue to have to file self assessment and pay any tax that may be due. 

There is no change to the tax payable.

It is just the process for reporting the income that is changing.  And that will doubtless only be for some people.

If you file a return say because of being in a (business) partnership then you would continue to report the side hustle on the tax return.

the_lunatic_is_in_my_head

Dazed_and_C0nfused said:

the_lunatic_is_in_my_head said:

Purple_Jumper said:

I read it as the need to complete a tax return was raised to earnings above £3,000 but that tax was still due on anything above £1,000 ie only the reporting threshold had increased.

How is anyone going to pay the tax if they don't have to report the income?

I read the article as saying 300,000 people have a "side hustle" bringing in more than £1000 and by increasing the threshold 90,000 people who were previously reporting income of between £1000 and £3000 will no longer declare / pay tax, the other 210,000 with turnover over £3000 will continue to have to file self assessment and pay any tax that may be due. 

There is no change to the tax payable.

It is just the process for reporting the income that is changing.  And that will doubtless only be for some people.

If you file a return say because of being in a (business) partnership then you would continue to report the side hustle on the tax return.

It doesn't make sense that they are going to have a separate way for 90,000 people to report their income. 

The article provides very little, probably as very little is known and time will tell, but just reading the words used

government plans to treble the tax-free trading allowance from £1,000 to £3,000.

Under the current rules, anyone with additional income of over £1,000 from side roles must file a self-assessment tax return.

By raising this level to £3,000...

That suggests the tax-free trading allowance will increase from £1,000 to £3,000 because, well, that's what it says