Non taxable self employment profits and interest taxation?

[didds]

Real numpty questions here so apologies in advance!

Last night I plucked up the courage to complete my Self Assessment. Its pretty simple stuff as I now have only

* PAYE full time employment
* a very small self employment "business" (IT related fixes in a very local area)
* a minimal amount of interest from our joint bank account and aligned saver account - £6.99
* tracker ISA dicidends of about £150

I filled in all the boxes and clicked though to find it said I had no self employment. So I went back and checked... and saw that as I'd turned over less than £1000 for 2018/19 Id ticked that box. It seems no profits made on turnover less than 1K are taxabale.

I was however left with a SA bill for £1.60. Which has to be the tax payable on the £6.99 asa higher rate tax payer ie 4-% of £6 (as HMRC generously ignore the 99p).

So my questions therefore are...

1) how long has this "free" income for self employmenmt with turnover < 2K existed? Prior to 2018/19 Id had a slightly more lucrative journalsim role that paid a couple of K pa so total self employment owud have breached this 1K limit etc so maybe I just didnt notice it before?)

2) I thought interest was only taxed once you'd accrrued more that some substantially higher amount than £6 in a year? Shouldn't the £6 interest be tax free?

3) presumably the dividend interest is tax free cos it is based on CT profits paid elsewhere?

cheers

didds

[tjh290633]

If you do not tick the box for "under £1000" self employed income, you can still enter the figures, even though the turnover is less. This is important if you have made a loss, which is not difficult to arrange.

Dividends from an ISA are outside the scope of income tax.

TJH

[didds]

mea culpa ... I meant < 1K not < 2K of course.

and its not an ISA, its just a tracker fund. Apologies.

I get the "dont tick the box and you can enter trthe real amounts etc" bit. I did make a small profit etc as it is but that is unimportant - my query was has this 1K self employment turnover thing been around for long?


and what about the tax on interest of £6.?

didds

[PinkDalek]

1) how long has this "free" income for self employmenmt with turnover < 2K [1k] existed? Prior to 2018/19 Id had a slightly more lucrative journalsim role that paid a couple of K pa so total self employment owud have breached this 1K limit etc so maybe I just didnt notice it before?)

Since 6 April 2017 https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income.

2) I thought interest was only taxed once you'd accrrued more that some substantially higher amount than £6 in a year? Shouldn't the £6 interest be tax free?

Yes but with your non-use of preview etc it is hard to see what you are saying (yes I know about the rugby injured fingers) but is ie 4-% of £6 supposed to read 40% of £6? That isn't £1.60 anyway. The first £500 of savings income (interest) for Higher Rate Taxpayers should be at nil. Are you certain you've filled in the form correctly and are reading the computation correctly?

[* tracker ISA dicidends of about £150 ... 3) presumably the dividend interest is tax free cos it is based on CT profits paid elsewhere?

If you are describing the same thing? Those dividends should not feature on your Tax Return at all. That's one of the main points of ISAs. Edit: I missed the follow-up posts.

[didds]

i did mean 40% of £6... and indeed that isnt £1.60 .

double DOH moment!!


didds

[PinkDalek]

i did mean 40% of £6... and indeed that isnt £1.60 .

Don't worry about the double dohs but it is that that makes me think you might possibly be picking up the wrong end of the story.

[Alaric]

2) I thought interest was only taxed once you'd accrrued more that some substantially higher amount than £6 in a year? Shouldn't the £6 interest be tax free?

I would have thought so. It could be a rounding effect on the PAYE.

3) presumably the dividend interest is tax free cos it is based on CT profits paid elsewhere?

There's a separate dividend allowance of £ 2,000, but in any case there's no tax on anything sheltered in an ISA.