New rules for declaring self-employment income
The situation regarding self-employment and whether you should pay tax on your earnings can be very confusing. However, for the 2017-18 tax year (running from April 6 2017 to April 5 2018), HMRC have issued some new guidance which may make things easier to understand.
You are classed as self-employed if you have responsibility for the success or failure of your business, as well as being in control of how, when and where you work. If you sell goods or services on a regular basis, even if this is through a third party, then you are classed as a trader, and therefore self-employed. It is possible to be self-employed at the same time as being employed.
In previous tax years, being self-employed meant that you were obligated to complete a self-assessment tax return form, and declare your income and expenses. For the 2017-18 tax year though, if your income from self-employment is less than £1,000 for that year, you are not obligated to declare it.
There are some scenarios where it is beneficial to declare your income from self-employment though, even if it is below the £1,000 threshold:
• If your business expenses in the year total more than your income (ie. you have made a loss) and you want to claim loss relief for this tax year, or carry this loss forward into a future year
• If you want to build your National Insurance contributions (for example to count towards your State Pension) by voluntarily paying the Class 2 amounts, you will need to declare your self-employment income on your self-assessment return
• If you need proof that you have been self-employed during the year, to be used in applications for things like maternity allowance, and childcare benefits
• If you think that your turnover will be above £1,000 in the tax year 2018-19, this will mean that you start to pay towards your future tax obligation
Hiring a chartered accountant or tax adviser in East Sussex is a great choice for self-employed traders, as they can be an invaluable source of advice and guidance for current and future tax years.
To discuss setting up as a Sole Trader in Sussex or to discuss your responsibilities get in touch with our Business Services Partner Robert who can discuss the best path with you:
Tel: 01825 763366
DIVIDEND TAX – WHAT IS IT? HOW MUCH DO I HAVE TO PAY?
When you own shares in a company, you can earn money from them in two ways: by selling the shares after they have grown in value, or by receiving dividends paid by the company. This article will discuss dividend tax for the 2018/19 financial year, what it is, how much you have to pay and when you’ll need to pay it.
Should you restructure your business model?
Restructuring your business model is likely to involve a change to business strategy or the direction of the organisation. This could include downsizing or introducing strategies such as outsourcing and resource allocation to save money. Read on to find out if restructuring your business could help you grow.
Save time & money with cloud accounting: QuickBooks in Sussex & the South East
Cloud accounting is similar to traditional accounting software installed on your computer however, it is not installed on your servers, but on a virtual network for which you pay a monthly fee. Read on to find out about the benefits for your company.
Sign up to receive our private content
straight to your inbox