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Trading Allowance and Second Self-employment

Is it allowed?

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A new client has asked us to review the last 2 years tax returns. In one of them, they have 2 self-employments.

S/e income of £20,000 and expenses of £10,000 = OK. On the second one income of £10,000 and trading allowance of £1,000 has been offset.

Is the trading allowance actually allowable against the second business income? I had thought that the income from trades are combined together meaning that it wouldn't be claimable against the second trade as the expenses have been deducted within the first?

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10th Jun 2019 09:53

The income from the the trades are combined if it is two self employment incomes. If it was employed and self employed the £1000 could be claimed for the self employed.

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10th Jun 2019 10:13

I believe if you have property and trading income you can have a £1,000 allowance for each type of income.

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10th Jun 2019 11:40

Isn't it an exemption not an allowance?

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to andrew1211
10th Jun 2019 12:17

The correct title for it is "Trading Allowance" FA 2017. Generically it's an exemption - but what's your point in context of the OP?

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10th Jun 2019 12:14

@ PALacc.

The claim for the Trading Allowance was incorrect, your understanding being correct (ie that the income from the other self-employment must be taken into account).

If, as seems likely, the error is on the 2017/18 Tax Return, then of course you are “in time” to submit an amended Return.

You may wish to ask your client to authorise you to query the error with the previous accountant. Whether you do or do not do so, please look into whether there were any expenses which could have been claimed against the self-employment at issue [the accountant may of course have information regarding expenses of (say) £400 which would otherwise have been claimed].

Basil.

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