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Claiming expenses if under personal allowance

17/04/2019 13:27:04
If a self employed person makes an annual turnover which is below the personal allowance threshold, is there any need to include expenses on the tax return? Are there any implications of not doing so?
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Claiming expenses if under personal allowance

17/04/2019 14:43:38
I have just advised a client not to as it exposes you to possible enquiries. You should show some expenses to show that you haven't just put the profit in the turnover box. You will be charged class 4 NI at 9% on anything over £8,242 so if the turnover is over £8,424 you might want to claim expenses.

Another thing to consider is whether your income needs to be reported elsewhere-student finance applications, benefit entitlement, retirement home fees. I

If you are likely to be applying for a mortgage, you should show the true state of affairs.
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Re:Claiming expenses if under personal allowance

17/04/2019 15:45:03
This is in response to the question asked by Anon123 17/04/2019 13:27:04

Hi,

As you are declaring either online or on the paper return, if the information on the return is correct and complete to the best of your knowledge, then allowable expenses should be declared on the return as this gives a true reflection of your net profit.

Although there may be no tax implications in not doing so where the total turnover is below the level of the personal allowances, assuming this is the only taxable income received, there could be implications in terms of tax credits, universal credits, benefits etc which may require you to produce your SA302 tax calculation.

Thanks for your question.




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Claiming expenses if under personal allowance

18/04/2019 09:04:22
Thanks for replies.

What about the £1000 trading allowance. Do you have to claim it if your expenses are £1000 or less, or can you claim still claim allowable expenses at an amount lower than £1000 to show the turnover and profit are not the same?
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Re:Claiming expenses if under personal allowance

18/04/2019 10:51:17
Hi,

You have the option to either use the £1000 trading income allowance or claim your actual expenses incurred. If you are using the trading income allowance of £1000 and your actual turnover is less than £1000 you can only claim the amount equal to your turnover.

Thanks for you question.



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Claiming expenses if under personal allowance

18/04/2019 11:22:16
If the turnover is less than £1,000 you don't even have to show it unless you want to pay Class 2 NI voluntarily.
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Re:Claiming expenses if under personal allowance

18/04/2019 14:30:09
THIS IS IN RESPONSE TO ANONYMOUS AT 14:43:38 ON 17/04/2019

As previously mentioned in HMRC Admin 45 response, when a self-assessment form is submitted the customer is declaring the information they provide is a true and accurate reflection to the best of their knowledge. This should be done regardless of any other situations or implications, in line with the allowances and reliefs available at the time.

I hope this helps.



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Claiming expenses if under personal allowance

18/04/2019 14:57:57
Might I suggest that HMRC 45 looks at the Gov.UK guidance or any other guidance like the LITRG website re the trading allowance. You do not even have to do a return if the turnover is less than £1,000.
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Re:Claiming expenses if under personal allowance

23/04/2019 08:02:30
Hi,

You are correct, there is no need to complete the return if the only criteria for the return is due to self-employment and your turnover is less than or equal to the £1000 trading allowance and this is what you wish to claim.

This point was referenced in the comments made about the allowances and reliefs available at the time.
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Claiming expenses if under personal allowance

23/04/2019 16:08:07
...am advised that if as a self-employed business a taxpayer decides to claim no expenses, for example because main expense is mileage and don't have time to keep mileage log, then declaring the same figure for turnover and profit is more likely to trigger a time consuming enquiry from HMRC?
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Re:Claiming expenses if under personal allowance

24/04/2019 09:15:16
Hi,

Please refer to the following link in respect of keeping business records if you are self employed:

Business records if you're self-employed

It is up to you whether you choose to claim expenses or not.

In respect of an enquiry from HMRC, I cannot comment in respect of your particular case.

The normal rule is following a submission of a SA Return, HMRC have 12 months from the date of filing to enquire into any aspect of that return, so long as the return is filed on or before the filing date. If you file your return after the 31/01, HMRC may have up to 15 months from the date of filing to start an enquiry.

Please refer to the following link:

Self Assessment: the legal framework
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Claiming expenses if under personal allowance

13/05/2019 09:09:59
If I have 2 self employed businesses one has returns of 20000 with expenses of 3000 and the 2nd business makes 3000 with expenses of 500 am I able to use trading allowance
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Re:Claiming expenses if under personal allowance

13/05/2019 11:10:46
Hi.

The Trading Income Allowance of up to £1000 can be split across more than one business. Please refer to the following link:
tax-free-allowances-on-property-and-trading-income.
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Claiming expenses if under personal allowance

14/05/2019 06:35:14
So in the instance above the total profit will be 19000 and not 19500
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Re:Claiming expenses if under personal allowance

14/05/2019 09:19:35
Hi.

You can set £500 against one trade and the balance against the other trade. Remember if you use the Trading Allowance you cannot claim expenses.

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