Was the £1000 Trading Allowance scrapped?

You might have heard rumours that the £1000 trading allowance was scrapped, but rest assured, it’s still available! This allowance allows the self-employed to earn up to £1,000 tax-free. 🎉

Whether you’re a part-time freelancer or running a small business, this allowance is your chance to ditch the complicated paperwork and keep things simple. Let’s break down how it works, clear up the rumours about the £1,000 trading allowance being scrapped, and explain what you need to know next.

First of all, what is the Trading Allowance?

If you’re self-employed, you can get up to £1,000 each tax year without having to pay income tax or national insurance contributions. So, no – the £1000 trading allowance hasn’t been scrapped. 😅

In much simpler terms:

• If you earn less than £1,000 from self-employment, it’s completely tax-free (no need to complete a tax return for this)
• If your expenses are under £1,000, you can simply claim this allowance instead (it’s bigger and you don’t need to worry about receipts)
• If your expenses are over £1000, you can use the Trading Allowance as a partial relief

Who else can claim the Trading Allowance?

The Trading Allowance isn’t limited to those with a limited company. Here are some others who can claim the Trading Allowance:

• Construction workers claiming the CIS tax rebate 👷
• People who provide casual services, i.e babysitting or selling a few items on eBay
• If you’re renting out items, for example, power tools 🧰

Landlords are usually entitled to a similar allowance on property income. This is also a cool £1000, so if you have both types of income, you’ll get a £1,000 allowance for each. Sounds good to us!

Do I need to submit a Self Assessment tax return to claim it?

Whether you submit a Self Assessment tax return depends on how much you earn from self-employment. It also depends on how you choose to use the £1000 trading allowance, which hasn’t been scrapped.

If your income from self-employment is under £1,000 and you don’t have another reason to file a tax return such as employment income over £100k, then you don’t even have to register for Self Assessment in this case. ❌

On the other hand, if your gross trading income is over £1,000, then you will need to report this income to HMRC by completing a Self Assessment. ✅

On your Self Assessment, you should deduct the Trading Allowance and tick the box to ensure HMRC know you are doing so.

The £1,000 Trading Allowance is Here to Stay

Despite the rumours, the £1,000 trading allowance is still available, offering a simple way for self-employed individuals to manage their income. Whether you’re earning from side gigs or running a small business, you can earn up to £1,000 tax-free, cutting down on tax stress and paperwork. 👏