Micro entrepreneur allowances
‘I read something about tax allowances for micro-entrepreneurs and hobby businesses (including eBay traders). It mentioned something about £1000 for trading income and £1000 for property income. How does this work?’
These allowances were expected to be available with effect from 6 April 2017. Meaning, if you have property and/or trading income below £1,000 you would no longer need to declare or pay tax on it. If you have income above £1,000 you still need to complete a Self Assessment but can calculate your taxable profit either by deducting their expenses in the normal way or by deducting the relevant allowance from their gross income. You can’t use the allowance and deduct expenses so you need to work out what is best for your situation.
However, as a result of the General Election campaign, this provision (along with many others) has been put on hold. The allowances are expected to be introduced following a post election budget.
In the meantime, it is worth remembering about Rent A Room relief. Currently anyone letting a room in their home including through websites such as Airbnb can receive up to £7,500 per year in rents without paying income tax. If you earn under the limit you don’t need to tell HMRC.