Documents for Business
In excess of 1,000 customisable documents covering every conceivable business issue.Introduction to this document
Trading allowance claim for partial relief
The trading allowance is a fixed tax deduction given automatically against miscellaneous or trading income if it is no more than £1,000 in total during the tax year. Where income exceeds £1,000, the trading allowance can be claimed as a deduction instead of the expenses incurred in generating the income. This is known as partial relief.
Example
In 2023/24 Jo sells homemade bags to local shops. Her income from this is £1,200. She incurs costs for materials etc. of £400 per year. Jo claims the trading allowance partial relief. Her taxable profit from bag making for 2023/24 is £200 (£1,200 - £1,000).
Making a claim
Partial relief can be claimed through a self-assessment tax return or in writing as a standalone claim. The claim must be made within four years from the end of the tax year to which it relates. For example, for 2022/23 the claim must reach HMRC no later than 5 April 2027.
