Documents for Business
In excess of 1,000 customisable documents covering every conceivable business issue.Introduction to this document
Flow chart - claiming the trading allowance
The trading allowance is a fixed tax deduction which can be claimed against miscellaneous income or income from self-employment in place of the actual costs incurred in generating it. In effect it means that individuals can receive up to £1,000 of income tax free. However, there are many anti-avoidance rules which are hard to follow.
Flow chart
The Flow Chart - Claiming the Trading Allowance will help you decide if you are entitled to claim for a tax year.
Definitions for the flow chart:
- Connected person - for the purposes of the trading allowance a person is connected to another person if they are that person’s:
- spouse or civil partner
- brother or sister
- ancestor
- lineal descendant
- spouse’s or civil partner’s brother or sister
- spouse’s or civil partner’s ancestor
- spouse’s or civil partner’s lineal descendant
- Associated person - associates for most tax purposes means persons who are
- relatives:
- a husband, wife, or civil partner
- parents and remoter forebears
- children and remoter issue, e.g. grandchildren; and
- siblings
- partners in any partnership
- trustees of a trust the person is involved with; and
- the personal representatives of a deceased person if the person has an interest in the estate
- relatives:
- A close company is defined as any UK-resident company which is controlled by five or fewer participators, or any number of participators who are directors.
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