Allowance for micro entrepreneurs

By John Steveni

The new £1,000 allowance for micro entrepreneurs is aimed partly to clear up the confusion around what tax must be declared on peer-to-peer income. The allowance isn't restricted to the so called sharing economy, and will apply to all manner of enterprise, whether using your car to ferry people around, gardening, odd jobs or cleaning.

This makes sense - why should an online entrepreneur get more relief than someone who prefers to advertise through the letter box. The biggest impact of the new allowance will be in putting people's minds at ease. If you're doing a little bit of business in your spare time, you needn't fret about a potential tax bill. It also sends a message to those earning above the limit that their income could be taxable.

In this sense the measure is fairly symbolic. Given some people earning above the limit will already be claiming expenses in calculating their tax, the measure may not cost the government the full face value because you have to claim the relief, or the expenses, but not both.