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Peter J query in relation to traders allowance £1000

  • 3 posts
  • # 116566

Hi Peter,

 

You posted the following, won't let me reply on your post;

"Hi all

In preparation for 2017/18 self assessment returns, I've been looking at the new £1000 trading and property allowances.

My understanding is that if someone has a small amount of income from providing goods or services alongside their main job, they can choose to claim £1000 as trading expenses rather than adding up their actual trading expenses (which might say only be £500). I understand there is also a £1000 allowance for property income, but I'll leave that for now.

So, for example, David earns £1500 alongside his main job income from providing a service. He can claim £1000 trading expenses instead of working out individual expenses. On his self assessment form, can he also claim capital allowances for say £200 worth of long term equipment he uses to provide the service?

So in summary, is the £1000 allowance purely relating to day to day trading expenses? And can the person still make an entry in the capital allowance box?

Any thoughts appreciated.

Peter"

The trading allowance applies to self-employed income whether or not you are employed, it doesn't necessarily need to be a 'second job'. Therefore you wouldn’t need to declare the first £1000 (applies to your income, not your profit). you can either deduct your actual expenses (e.g. the cost of the items you bought for resale) or deduct the £1,000 allowance. You don’t set a precedent if you decide to deduct the allowance this tax year – the next year you can choose to deduct your actual costs instead, if that gives a better result.

In respect of the capital allowances. So, if I am at the beginning of my new job as a bookkeeper, and I get a little bit of casual income from one or two small jobs in Year 1 but spend 10 grand on a workstation and software, then by default I can kiss goodbye to my losses, unless I remember to elect to disapply the new trading allowance. (As far as as Capital Allowances are concerned, I could make a claim in a later year, but the basic logic holds good… or bad).

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