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]

Originally Posted by OldWelshGuy

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]

Originally Posted by OldWelshGuy

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]

Originally Posted by bochgoch

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.