I work full-time for an employer and pay tax through PAYE. During the last few years, I have also earned some income from freelance graphic design work, and occasionally selling handmade products online. I am unsure if I should be completing a self-assessment tax return form and am worried in case I will be penalised.
Arthur Weller replies:
The key point here is whether you made more than £1,000 in any tax year from this personal trading. If you never made or don’t make £1,000 or more in any tax year, you are eligible for a trading allowance (see www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income). Consequently, you will not have to tell HMRC or declare this income on a tax return. If you have made or are making more than £1,000 gross income in a tax year, you need to register for self-assessment and submit a self-assessment tax return. If you have gone above the threshold in previous years, you are likely to be much better off approaching HMRC about this than HMRC approaching you.
