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’re registered as self employed then HMRC needs some way of monitoring your earnings, regardless of whether you made any profit. They do this with a self assessment tax return and it’s a legal requirement.
The good news is that if you’re self employed and your business has made a loss, not only will you not pay any tax but it can be beneficial to record this loss on your 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, saving you tax in later years.
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.