Small craft business sideline
Options
rickyroma
Posts: 166 Forumite
Just want to be clear about future tax payments if I can so I can make sure how much tax I will soon have to pay!
I have a full time job earning £23,000 pa. I also have a small craft business run from home where I will make about £6000 by April 2020.
Am I correct in thinking that I only pay tax on anything above the first £1000 leaving me with £5000 liable for tax? After expenses the £5000 would be reduced to £4000 profit.
Is it as simple as saying there will be 20% tax to pay on £4000 ?
Sorry if these questions are very simple but I have never done anything like this before.
And I fear this will be a stupid question , but , do I pay national insurance on my craft profits too or is that just something that is paid through my normal employment?
I have a full time job earning £23,000 pa. I also have a small craft business run from home where I will make about £6000 by April 2020.
Am I correct in thinking that I only pay tax on anything above the first £1000 leaving me with £5000 liable for tax? After expenses the £5000 would be reduced to £4000 profit.
Is it as simple as saying there will be 20% tax to pay on £4000 ?
Sorry if these questions are very simple but I have never done anything like this before.
And I fear this will be a stupid question , but , do I pay national insurance on my craft profits too or is that just something that is paid through my normal employment?
0
Comments
-
You can't deduct your actual expenses AND the £1,000 trading allowance. It's one or the other, so you'd just deduct the larger amount. So your taxable profit would be £5000.
Yes, at that level tax is 20% so £1,000 but be careful because if your profits are more and the tax is over £1,000 you also have to make payments on account so you could find yourself paying two years worth of tax in a single year.
If profits rise to around £7k, you'll also have NIC to pay.0 -
You can't deduct your actual expenses AND the £1,000 trading allowance. It's one or the other, so you'd just deduct the larger amount. So your taxable profit would be £5000.
Yes, at that level tax is 20% so £1,000 but be careful because if your profits are more and the tax is over £1,000 you also have to make payments on account so you could find yourself paying two years worth of tax in a single year.
If profits rise to around £7k, you'll also have NIC to pay.
Very useful. Thank you very much
Regarding expenses.. would I be able to get away with claiming a mobile or home wifi contract is an expense as the craft business is conducted through Facebook and Instagram..or is that being too cheeky ?:rotfl:0 -
Very useful. Thank you very much
Regarding expenses.. would I be able to get away with claiming a mobile or home wifi contract is an expense as the craft business is conducted through Facebook and Instagram..or is that being too cheeky ?:rotfl:Signature removed for peace of mind0 -
Very useful. Thank you very much
Regarding expenses.. would I be able to get away with claiming a mobile or home wifi contract is an expense as the craft business is conducted through Facebook and Instagram..or is that being too cheeky ?:rotfl:
As a sole trader, you can claim the proportion of any "dual" expenses like phones and broadband. If, say, you use them 50% for business and 50% for personal, you can claim 50% of the total costs. You just have to be able to prove your percentages to HMRC if they challenge your figures which can be hard. Basically, the bigger your claim, the more likelihood of challenge and more difficult you'll find it to justify the claim. Most people would claim say 10/20% which is usually easier to justify and more likely to avoid challenge. But, as said above, if you're going to claim the £1,000 fixed allowance instead, you won't be claiming anything for phone/broadband on top of that.0 -
Just another query on this.. not worthy of another thread !
I intend to declare my income for the past tax year but am a little worried I should have actually informed HMRC at the moment I started selling online (april last year ) . So .. when I get to the question "when did you start trading" .. if I answer April 2019 am I going to get a fine or anything for not informing them at the time I actually started up ?0 -
rickyroma said:Just another query on this.. not worthy of another thread !
I intend to declare my income for the past tax year but am a little worried I should have actually informed HMRC at the moment I started selling online (april last year ) . So .. when I get to the question "when did you start trading" .. if I answer April 2019 am I going to get a fine or anything for not informing them at the time I actually started up ?
HMRC will then send you a tax return with the "normal" absolute deadline of 31 Jan 2023 for submission.
https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed
obviously life will be much easier if you do it before that deadline
1 -
oldbikebloke said:rickyroma said:Just another query on this.. not worthy of another thread !
I intend to declare my income for the past tax year but am a little worried I should have actually informed HMRC at the moment I started selling online (april last year ) . So .. when I get to the question "when did you start trading" .. if I answer April 2019 am I going to get a fine or anything for not informing them at the time I actually started up ?
HMRC will then send you a tax return with the "normal" absolute deadline of 31 Jan 2023 for submission.
https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed
obviously life will be much easier if you do it before that deadline0 -
No, oldbikebloke is saying that if you started trading AFTER 5th April 2019 you are OK.
However, even if you started trading BEFORE 5th April 2019, you are likely to be OK, because you are vanishingly unlikely to have made enough profit to need to pay tax on it.
So register as self-employed with HMRC, do your tax return, pay any tax due, job done.Signature removed for peace of mind1 -
as i said, the cutoff date to register is 5th October in second TAX year of trading
apply that rule to the actual date you started trading "in" April 2019 given a tax year starts on 6th April....1
Categories
- All Categories
- 343.3K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 248K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards