Trading Allowance

What is a Trading Allowance

If your expenses are more than your income it would be beneficial to claim expenses instead of the allowances.

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Trading Allowance is a tax exemption / allowance for up to £1,000 for individuals who may be earning money as Self-Employed or even on the side via their hobbies.

You get the £1,000 allowance each year for property or trading income. What’s better is if you have both types of income you get the £1,000 trading allowance for each.

What does this mean?

It means you wont have to tell HMRC if you earn less than the £1,000 trading allowance.

Also, if you need to complete a Self Assessment for any other reason you won’t need to declare this.

If however you do earn over £1,000 you will need to declare this to HMRC. However, if your turnover is over £1,000 but your costs were less than £1,000 you can claim the £1,000 trading allowance as an expenditure instead of your actual cost base.

If your expenses are more than your income it would be beneficial to claim expenses instead of the allowances.