Taxes can be time consuming and expensive to deal with. What can feel more frustrating is having to deal with filing a tax return even if you have made no money. Unfortunately, time, money or lack of understanding is no excuse in the tax mans eyes so you may well find yourself in the situation of having to file a tax return even if you have made no money.
Tax Returns & Self Employment
If you registered as self employed then HMRC needs some way of monitoring your earnings, regardless of whether you made any profit. They do this by requiring that individuals you are self employed submit a self assessment tax return and it’s a legal requirement.
The good news is that if you are self employed and your business has made a loss, not only will you not pay any tax on your loss, it can be beneficial to record this loss on a tax return because you can set tax losses off against future profits you make in your business. So if you have had a bad year or are just getting started in your business you can reduce your taxable profits in later years by this loss, reducing your tax bills later on.
HMRC £1,000 Annual Tax Allowance for Trading & Property Income
If you have not yet registered as self employed and your gross income, before costs and expenses is £1,000 or less then you may not need to fill out a tax return. Find out more about whether you are eligible for the £1,000 trading allowance here.
HMRC has a great tool to help you establish whether you need to submit a tax return. Head over to HMRC and check now.
If you are still unsure whether you need to submit a tax return, here is a list of circumstances where HMRC require individuals to submit tax returns.