UK marketers please help with taxation question

13 replies
Hi,

I started IM not long ago and I'd like to know how you have to handle taxation in the UK. I haven't earned anything yet, but I expect some money flowing in the next month.

I'm not currently employed (student). Do I have to register as a self-employed?

So how do you pay tax after your IM business in the UK? I use all kinds of monetization methods on my sites (Adsense, Amazon, CJ, CB)

Any help is appreciated
#marketers #question #taxation
  • Profile picture of the author matt5409
    hi there

    yes you need to register as self-employed (the quickest and easiest way) OR become a limited company.

    you file your tax return alongside your employed income, keeping it separate (you dont need to take tax off for employed income as this is done before you get paid). i think you need to factor in 22% in tax if you turnover under 36k in total.
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  • Profile picture of the author Jeff Usher
    Hi there,

    First thing you need to do is register yourself as self-employed over at the HMRC website.

    HM Revenue & Customs: First steps to register as self-employed

    Next, get a good accountant. I use a local one listed under the Taxassist.co.uk website, they cost me £30 a month, but are local, available and very responsive.

    Next set up a spreadsheet, different tabs for income, expenses, bank accounts etc and just make sure you keep a record of what goes in and what goes out of your bank accounts that are related to your self-employment.

    Next have a chat with the accountant and explain your business to them. Mine didn't have a clue about Internet Marketing but business is business and taxes are taxes no matter what line of work you are in. Most accountants will grasp affiliate marketing and commissions etc, as well as have a knowledge of how PayPal works.

    Then just wait for the money to come in, wait for HMRC to get in touch and confirm you are self employed, let the accountant handle any queries you have and away you go.

    Best to have 2 bank accounts set up. One for all your income and one for your taxes. When I get income into my account I immediately remove 20% of it to the taxes account. Get into this good habit and don't be tempted to dip into the tax account as it grows - or you'll be in trouble when self-assessment comes around and you have no money in there. So if CJ deposits £100 into my account, £20 of that gets transferred into the tax account.

    Hope that helps.

    Jeff
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    • Profile picture of the author eramedia
      Great advice about having a seperate account for your tax. Although I stick 30% in and then if I come out under the 36K threshold, I have a bit of bonus money after paying the taxman!!!
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  • Profile picture of the author Andyhenry
    You've had good advice.

    Definitely register as self-employed but don't forget to check what your entitlements are. There are a lot of resources available to support people out of work and starting their own businesses.

    I had a few meetings with a start-up advisory called NWES which were useful.
    Signature

    nothing to see here.

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  • Profile picture of the author dtommy79
    Thanks for the answers guys.

    One more question. What if my income is not yet very much and continuous? Should I register as self-employed anyway or it's not worth the trouble until I make a steady income?
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    • Profile picture of the author sonnyboy
      Hi Guys,

      Can I ask what the situation is if you are fully employed? If I happened to make some money, how do I pay the tax then?
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      • Profile picture of the author paul wolfe
        Originally Posted by sonnyboy View Post

        Hi Guys,

        Can I ask what the situation is if you are fully employed? If I happened to make some money, how do I pay the tax then?

        An accountant is the best person to answer that.

        But essentially what you have to do is file a tax return - in that tax return you have to account for all your income.

        That could be:

        1) The full time income you talk about
        2) Interest earned on any savings accounts (not that anyone in the UK earns on their savings accounts these days! )
        3) Any additional revenue sources - which is where your IM stuff would come in.

        But speak to an accountant. HM Customs and Revenues are people you don't want to get on the bad side of.
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      • Profile picture of the author Therese
        Originally Posted by sonnyboy View Post

        Hi Guys,

        Can I ask what the situation is if you are fully employed? If I happened to make some money, how do I pay the tax then?
        You can register as self-employed while you are in full-time employment.

        I kept my own accounts using a program called simple business accounting which I bought online Simple Business Accounting They have a free trial.

        I signed up with Just Tax uk tax return service and had them do the self-employed tax return.
        I used to send them a print-out from the software with supporting invoices etc. It worked out just fine.
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  • Profile picture of the author Chris Sorrell
    You've got a personal allowance of nearly £7k so I wouldn't start worrying about it just yet
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    • Profile picture of the author sonnyboy
      Originally Posted by sorrellaff View Post

      You've got a personal allowance of nearly £7k so I wouldn't start worrying about it just yet
      But is that not taken into account when I am paying tax on my full time income. (PAYE)?
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      • Profile picture of the author Pluton
        The tax people are'nt as bad as they are cracked up to be.

        Presumably you are earning elsewhere at the moment and you are talking about some additional income to that.

        Go down to your tax office and talk it through with them and they will point you in the right direction - they will tell you what you can claim for and what you can't.

        I was self employed / limited company / VAT registered in the UK for over 30 years. Don't try and be clever with them - be straight and they will be straight with you.

        Honestly if you are'nt talking about much additional income to start off with I would'nt even bother with an accountant - leave that until you are really earning and can afford to pay their fees.
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        • Profile picture of the author blackjack
          Get yourself a good accountant and Don't trust advise from forums. It will save your life in the long run. Your accountant will tell you exactly what expenses you can offset against your IM income. Do you know that you can write off part of your heating costs against your IM income or how about part of your petrol. If you have a really really good accountant (some one who charges per 15 minutes rather than hourly rates, specialy in London) you will pay as little tax as possible. Tax Avoidance is encourge by HMRC but it is Tax Evasion that is criminal crime in UK.

          A good accountant will have much better knowledge than people like us on this forum

          Like someone mentioned "wait until you start getting some income, before bothering to tell the tax people".

          Well UK rules states that you have 30 days to notify Tax Dept after you start any business regardless if you are getting any income or not. Then there is issue of VAT.

          So my best advise is find a good accountant.
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  • Profile picture of the author seafrontsteve
    The advice I got from an excellent accountant (before he was poached to become CFO of a private company) was "wait until you start getting some income, before bothering to tell the tax people".
    It helps to get started setting up a business bank account - which takes time.
    You can think up an interesting name for your 'Company' - that will appear on your cheques as 'Trading As ...'
    When that happens, you can register and consider two other issues;
    1. If you have low income (< about 3k / year) - you need to claim for exemption from the need to pay NI
    2. If you are expecting significant income you can apply for VAT registration (you must do this if your annual income exceeds £70k - even pro rata for a monthly) and register for the Flat Rate scheme for income less than £150k
    Registering means you need to charge VAT on sales but can reclaim VAT on purchases. The flat rate scheme avoids having to pay VAT on sales before you get paid and simplifies paperwork - but you need to check if you will profit from using it or not.
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