Last Updated on August 1, 2021 by admin
Self employed persons should be aware that there is a trading allowance of £1,000 available which is relevant to bookkeeping in that it may affect the records you need to keep (and whether or not you need to file a tax return – see HMRC).
If your total trading income is £1,000 or less then the income is covered by the trading allowance. Note that total trading income means total receipts before deducting any expenses. It does NOT mean profit (income after deducting expenses).
If your total income is more than £1,000 you can claim the £1,000 allowance instead of claiming actual expenses. Obviously this would only be beneficial where actual expenses were less than £1,000.
Where you do not need to complete a tax return or you do but you intend to claim the trading allowance instead of actual expenses you must still keep records to prove your income.
The next post looks at software for cash basis accounting.
Note: There is also a property allowance of £1,000 for property income.