Tax in the UK

[rhyswynne]

Not sure if this is the right forum, but here goes.

Through blogging and my other online ventures, I probably earn about £1000 a year through link sales and the like. Recently, a few of my mates say I should declare it as tax or else I'll get collared for it at a later date.

I'm unsure exactly what to do regarding it, so two questions:

a) Should I worth declaring it?
b) How does one go about making sure I pay tax on it?

Thanks

 

[temi]

Your mates are right, you need to declare it to the tax man. Though you will not need to pay any tax on it (if this is your only income) I think you are allowed about £4,000 tax free or something like that.
If you have income from a full time job in addition to your income from blogging, then you will definitely have to pay quite a bit of tax, but you should keep your hosting receipt, links you buy etc etc as those will be deducted from your earnings from your blogging, you will then be tax on the difference between what you earn and what you pay out to keep your blogs online.

Its always better to speak to a professional though, I have not accountancy qualifications whatsoever but I am fairly sure that is how things work.

 

[rhyswynne]

Yeah, that's what I kinda gathered. I may speak to a professional, see how much I can deduct. Should be a fair bit

 

[OldWelshGuy]

ALL UK people have a tax free allowance (that is you are allowed to EARN a sset amount before paying tax).

Students get further benefits as you can claim your books etc as a cost against income.

It is VERY complicated, but LSO FAIRLY SIMPLE, SO SPILL THE beans

 

[bochgoch]

rhys,

One solution is to set up a limited company and bank account and funnel your online income and overheads (hosting etc.) through that, it adds to the your administration burden, but has the advantage of keeping your personal tax situation cleaner. If your company makes a profit you can then think about taking some of that profit.

 

[OldWelshGuy]

You have to be very careful using a LTD co though as you can not simply withdraw money like you can with being a sole trader. A Ltd co is a third party entity in law, and writing a cheque to yourself is technically stealing. You might also have to pay employers NI as well as Employees NI also any dividends you pay yourself automatically atract the dividend tax of 19%.

Just open a separate bank account for the business and run the money through that as a sole trader.

 

[rhyswynne]

Just open a separate bank account for the business and run the money through that as a sole trader.

That's what the accountant at my mate at work said

 

[bochgoch]

Just open a separate bank account for the business and run the money through that as a sole trader.

Still got to worry about the tax man though - no way away from him!

A limited company works for me as I'd pay tax at 40% on any income I took, so I leave the money in the company and reinvest to avoid corp tax on profits - if you want to get your hands on the money then sole trader is easier...

 

[vicdigi]

A limited company works for me as I'd pay tax at 40% on any income I took, ...

You shouldn't be paying 40% tax if you take money as dividends

 

[Resonate]

I have recently had to become VAT registered about 5 months ago so im fresh on this, If your business turnover is more than the VAT threshold (£64,000 from 1 April 2007) you will normally have to register for VAT. Even if your turnover's below the threshold it might benefit your business to register voluntarily.

 

[Robocop]

I have recently had to become VAT registered about 5 months ago so im fresh on this

The VAT man offers an option of paying 10 to 12% VAT instead on 17.5%. The way it works is you charge 17.5% but pay 10 to 12% to the VAT man on the condition you do not claim any tax back from the VAT man.

This can work well for you if the amount of VAT you can claim back is very small.

 

[Resonate]

The VAT man offers an option of paying 10 to 12% VAT instead on 17.5%. The way it works is you charge 17.5% but pay 10 to 12% to the VAT man on the condition you do not claim any tax back from the VAT man.

This can work well for you if the amount of VAT you can claim back is very small.

Excellent thanks for that info Robocop very helpful :helpsmilie:

 

[bochgoch]

You shouldn't be paying 40% tax if you take money as dividends

I pay 40% tax on my earnings outside of the internet so can't avoid it.

 

[mikeinlincs]

Through blogging and my other online ventures, I probably earn about £1000 a year through link sales and the like. I'm unsure exactly what to do regarding it, so two questions:
a) Should I worth declaring it?
b) How does one go about making sure I pay tax on it?
Thanks

Yes contact the tax asap as failing to declare your earnings and making a Self Assessment could result in a fine of £100 + from our lovely tax office.

Your earning are classed as self-employment and you will be taxed on them plus you will have to pay NI contributions as a self employed person, even if you have a full time job and pay tax + Ni under the PAYE.

HM Revenue & Customs: Home Page tax office online has more help... but contact your local office asap to aviod the fines.

Mike

 

[Robocop]

I have recently had to become VAT registered about 5 months ago so im fresh on this, If your business turnover is more than the VAT threshold (£64,000 from 1 April 2007) you will normally have to register for VAT. Even if your turnover's below the threshold it might benefit your business to register voluntarily.

Just to add, if you pay VAT you can opt to pay 10% to the VAT man instead of the 17.5% collected.

The deal is you charge customers 17.5% but pay the Vat man 10% BUTyou cannot claim any VAT back from expenses, purchases etc. This can work out very well if you purchase few goods. I have been doing this for the last 3 years.

Best advise is, if your not sure speak to the VAT/Tax man they can be a great help. If you ignore them and dont pay it or speak to them about it, they will slaughter you when they catch you :scared:

Edited to add: Dam it, just realised ive repeated myself from a few posts above.

I pay 40% tax on my earnings outside of the internet so can't avoid it.

Can you take on a partner to double the tax relief ?

 

[finalfrontier]

dont pay income tax, its a fraud.
by definition, tax is slavery, your labour is yours to sell to whomever you choose, nothing to do with paying some criminal gang..

 

[arora]

I pay 40% tax on my earnings outside of the internet so can't avoid it.

if ur a pvt ltd company - having directors split the dividend gets u into the 20% tax bracket!
eg ur partner & you are directors of a company & making say 30,000/ p.a each - instead of one person making 60,000 p.a & getting into the 40 % tax slab!

so both of you are paying 20 % tax - that's a saving of 20,000 pounds if ur earning 100,000 p.a

 

[OldWelshGuy]

he is already a 40% though. so any dividends he gets will attract higher rate tax.