When do you declare your online job to the tax man? (uk people)

[OnTheRise]

Not sure if this is the correct section to ask in, but I was wondering how you guys handle the more "legal" aspects of running your internet business.

If for example, you already have a full time job and you started earning money online did you inform your employer and the inland revenue straight away?

Just want to make sure I don't run into any legal complications If anyone could link me to some good information on the subject that would be appreciated.

thanks

[rosetrees]

Phone the Inland Revenue. I've always found them friendly and helpful. They won't ask who you are, but they will give you the information you need.

[CliveG]

If you are UK resident and making profits from your online business then they are taxable as income in the UK even if they are small.

As far as telling your employer is concerned, many UK employment contracts prohibit an employee having another job without the permission of the employer or competing with the employer. Look at the wording of your own contract. If you do not need to tell them I wouldn't. Be very careful, though, how you use any information derived through your work. The copyright in material produced as an employee usually rests with the employer and not the employee.

[ChrisJamesG]

Business support, information and advice | Business Link - Not sure how much there is on there about taxation but there's loads of info about legal issues.

[OnTheRise]

Thanks for the responses

CliveG.. no my online business venture will be in no way connected to my day job, but I will have a look through my contract.

Thanks again for the responses

[GuerrillaIM]

Originally Posted by rosetrees

Phone the Inland Revenue. I've always found them friendly and helpful. They won't ask who you are, but they will give you the information you need.

Really? I mean... Really? ...

Can't say I have had same experiences with them.


To the OP, you need to declare all your earnings and pay tax on them at end of year by filing a tax return. Or you could dodge it, but you might get in trouble.

[Platinum Matt]

You have to let tax man know you've started a business within 3 months of first trading... or they'll fine you.

[timmykins]

If want to run as a sole trader (the easiest option), you have to register as self employed (even if you have another full-time job) within 3 months of your first invoice, take that as a sale in IM terms. It does not matter how much you make, even if it's only a few pounds, you are liable for tax on it.

Your best bet is to check out the HMRC website (HM Revenue & Customs: Home Page), or in easier to understand terms check out the business link website (Business support, information and advice | Business Link).

Tim

[Tom Brite]

Last time i looked all this up you have to declare but if your earnings are less than about £3500 a year then you don't have to pay any tax on it.

However i would claim yourself as self employed too and then you will need to pay income tax for any amount over that. But then your internet, office space, computer chair, printer, computer, speakers, keyboard, mouse, bills, etc etc etc can be taken off your tax and so at the end of the year you will owe nothing! Just be clever with it!

Now if anyone knows anything about french tax's and their complicated system please tell me LOL! Im really confused with there 'tax' system if thats what you can call it!

Tom Brite

[artwebster]

If you are a UK tax payer you must declare all income. No ifs, no ands, no buts and no ors. There is no free margin! Your tax code defines the amount of tax you have to pay "on total earnings" if you are employed.
The tax office is definitely the place to go to get the 't's and 'i's crossed and dotted and they really are very helpful.

[rosetrees]

Originally Posted by GuerrillaIM

Really? I mean... Really? ....

Yes - really!!! I always phone if I have a problem. They are always helpful and it's always anonymous.

[Nicholas William]

you let them know shortly after you've moved to the Bahama's and have all your accounts offshore

[masonpan]

You are libel for tax on all PROFITS (income) and should declare it on a self assessment form at the end of each tax year but remember the profits bit, you can claim a lot of things as expenses. You have to have a computer to work so that becomes potentially a part of your tax calculation. The same thing applies to lots of things. You need software, a telephone, a printer, to purchase training etc. You can potentially claim for office space in your home. Unlike a couple of the people who posted above I have always found the tax people very helpful and polite. I suppose it depends how you talk to them, how you ask for their help and what sort of idiot the last person they had to deal with was. I would suggest that as your income gets larger, see if you can find a local book keeper. Maybe one who works for a local accountant and does extra work on their own. They may well know more about what you can claim and that will make a big difference to what you have to pay in tax.(and they usually save a lot more than you are paying them anyway) Good luck.

[masonpan]

Sorry Guys, Platinum Matt is also right about the 3 month rule. Have a look at the revenue web site too.

[Jenni Mac]

Yes 3 months or you're up for a fine! And yes they are very friendly and helpful if you don't try and hide income and mess them around.

I even went to a few of their free workshops to find out what you can and can't claim for - real eye opener there i.e. no you CANNOT claim for a business lunch! - and how to keep proper records if they call for them.

Always be transparent and don't listen to anyone who tells you can hold onto a few hundred quid here and there. If you earn £100, tell them and they'll tell you what, if anything, you need to pay.

[masonpan]

The business lunch claim is an interesting one. My book keeper did get the tax to agree a couple that were sales lunches (including introducers of sales) that produced imediate income (not sure if that was why they allowed it) But yes, its always worth asking and I have to say my lady book keeper is worth her weight in gold.

[Andrew Vaughan]

Glad to see that masonpan has mentioned expenses.

By the time some of us have made our first sale, we'll have spent thousands.

[GuerrillaIM]

Originally Posted by Andrew Vaughan

Glad to see that masonpan has mentioned expenses.

By the time some of us have made our first sale, we'll have spent thousands.

Yes, keep all of your receipts, for absolutely everything. It will reduce your tax.

[biggus]

I agree that probably the best place to start is the Inland Revenue's web site. This saves you calling them up and saying "I have a friend who's started an internet business..."

[biggus]

Oh, and good luck with it all!

[willyboy104]

It depends for myself, because I am a student my income is not taxable until I reach £6,000 ( a little bit over) for each tax year.

Boy, I love it =D

[Bounderby]

Originally Posted by Tom Brite

Last time i looked all this up you have to declare but if your earnings are less than about £3500 a year then you don't have to pay any tax on it.

Originally Posted by willyboy104

It depends for myself, because I am a student my income is not taxable until I reach £6,000 ( a little bit over) for each tax year.

Boy, I love it =D

Everyone in the UK has a tax free allowance of £6,475 for 2009/10. It doesn't matter if you are a student or not, or whether you already have a PAYE job (i.e. you're an employee).

The difference is if you already have a job earning over £6.5k you will pay income tax (20%) on all your IM profits because your job uses up all your allowance, whereas if you are a student without a job you can earn £6.5k from IM without having to pay tax. Whether you are liable for tax or not, you still MUST register as self-employed if you make ANY money at all from your IM ventures. If you don't pay tax at the end of the year, great, but you still have to tell HMRC you are earning.
Tom I think you might be confusing Income Tax with National Insurance, as if you are only earning a small amount (~£4.5k) you can get an exemptions certificate from NI contributions.