The HMRC have introduced a simplified method for the Self-Employed and those earning income from UK property to complete their tax returns, the ‘Three Line Account’.
So long as your annual turnover from self-employment or income from UK property is below the VAT registration threshold, which is currently £81,000, you are entitled to use the Three Line Account.
Using this method, all that needs to be provided on the relevant pages of your tax return are:
• the details of your business
• the turnover in the tax year
• the overall total of allowable business expenses
• the net profit or loss (which is calculated automatically if the tax return is completed online)
• the details of any adjustments, allowances claimed or losses brought forward.
However, this is optional and, if you prefer, the full breakdown of your expenses can still be submitted.
There is often confusion on what to include in the turnover of a business for the year. As a result, we have added ‘What is Turnover?’ into our Guide section at http://cooperfaure.co.uk/what-is-turnover/.
From the 2013-14 tax year, sole traders and partnerships with an annual turnover below the VAT registration threshold qualify to use the ‘Simpler Income Tax’ method. This allows the business to report on a cash basis and, for certain types of expenses, flat rate allowances can be used rather actual costs.
A more detailed review of the Simpler Income Tax method will feature in our newsletter next week.
At CooperFaure, we have extensive knowledge of personal tax matters. If you would like assistance with your tax affairs, please contact email@example.com to arrange an initial free consultation.