Profit is how much money you’re left with after you’ve subtracted costs from your earnings.
You don’t talk about making profit when you’re only a full-time employee with no other earnings. Knowing your profit is important because that is what HMRC will tax you on.
If your costs are higher than your earnings, you’ve made a loss. That’s not great, but sometimes you can use it to offset a profit next year and pay less tax then.
The allowance for 2023/2024 is £6000. Any profit you accrue beyond this threshold will be liable for tax.
When you first start trading and making a profit, there can be a lot to navigate with your accounts, so let our team help you get set up! Our experts are well versed in Capital Gains Tax and accounting, so contact us today.