£1,000 Trading Allowance

[Nick_13]

Good Afternoon Finance Forum,

My partner who is employed 25 hours per week at a school, has signed up to go on a couple of courses to start offering beauty treatments. She will mainly be doing these at home or at the clients house (more than likely just friends) but also has the opportunity to work out of a friends hair salon once she has built some confidence. I am supporting her in trying to get this off the ground as her own little business but in reality I can not see it raking in huge sums of money.

I know a lot of these types of operation just work on a cash in hand basis but we are both clear that we want everything to be above board. She has got some quotes for PLI and I am looking into the book keeping/accounts side of things. I have done a bit of research online but wondered if anyone here could point me in the right direction and maybe answer a couple of questions?

1. If her GROSS income is under £1,000 then can she still claim Trading Allowance, even though she is employed?
1.1. If yes to above then she doesnt need to do anything other than keep a record of all income and expenditure, incase she is flagged up in the future?

2. If she is not able to claim the allowance or the income does exceed £1,000 then I understand she just does a Self-Assesment tax Return at the end of the year?
2.1. If yes to the above does she just need to do anything now to inform anyone? or does she just keep all records of all income and expenditure for self employed work to input into the return, along with PAYE details?

• As she will have paid tax on her PAYE already through her employer, I assume the tax payable after the assesment would work out something along the lines of "Total tax payable from all income - Amount already paid PAYE = amount owed". If we just keep back 20% from all self employed wotk then this would more than cover any liabilities after deduction and avoid any nasty surprises.

As mentioned if she makes £1,000 out of it (certainly in the first year or so) then that would keep me happy.

Thanks in advance for your help.

Nick

[V8RX7]

I hadn't heard of trading allowance so a quick google took me to:

https://www.litrg.org.uk/tax-guides/self-employmen...

The brief video seems to cover most of your questions

[Nick_13]

Thank you. I watched the video which was helpful. I still can't find anywhere that states specifically whether you can or cannot claim it whilst employed. Although I have done some more digging around on the GOV website and found this:



I guess she does have to now file for self assessment on ANY income received as she has other income over £2,500.

If your main income is PAYE but you have small earnings from another source - does she fill out a self employed or employed self assessment? I am guessing that the employed version will give the option to add other income from self-employed and vice versa? Being that the main income is employed we should go with that?

Thanks again for taking the time.

[Eric Mc]

There is only one self assessment form. However, supplementary pages are added for specific types of income - employment, self employment, rental income, Capital Gains etc.

[V8RX7]

IIRC when I started, you simply notify HMRC and they then send you out emails to remind you to fill in a Self Assessment form, most do it online.

At this level it's a very short form and easy to understand.