The trading allowance exempts some low earners from submitting a tax return and allows others to simplify their tax return by not having to record their expenses.

Trading under the allowance and not submitting a tax return

The trading allowance allows anyone with self-employed or miscellaneous income of up to £1000 to avoid submitting a tax return.

It applies to your total self-employed income (total sales) rather than profit. If you organise your transactions in Earnr, you’ll see your total income for the year on the insights tab.

Trading over the allowance and claiming it in place of expenses.

If you earn over £1,000 (total sales) you can still claim the allowance. In this scenario, you apply it in place of any expenses to reduce your taxable income by £1,000.

You can utilise the trading allowance in this way under Self Employment on the tax tab. Select the allowance there and confirm the form.

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