Forum Moderators: phranque
I want to get things legal and correct right from getting off the plane at Heathrow.
My situation is likely to be website earnings being 80% of my income plus a small part-time job too. Do I need to register as self-employed or not? Should I just head to local Inland Revenue and let them take it from there?
Any info from people in the UK who have done this would be appreciated....
Im in full time employment, but the website is a hobby website?
Im sure the Goverment would try and tax webmasters for calling themselfs webmasters!
ok, so I will have to register as self-employed. Would the situation be complicated by me also doing a part-time PAYE job or not?
and, if I register as being self-employed, what will I be able to claim as expenses?
- my pc?
- hosting fees?
- adwords advertising?
- new scanner?
- broadband connection fee?
- phone bill?
bit of a beginner when it comes to this sort of stuff...
rj...if you are earning money from ANYWHERE and living in the UK, then that income is taxable. Even if it is only $50 a month. That is why I intend to be fully above board and legal when I return.
Thanks i will look into it...
I dont know anything about Tax and all that. If I find out they will tax me loads then its really bad because ive paid for a domain name, paid for hosting, and put in loads of work into a site!
rj..
You can deduct any expense necessary for the running of your business from your profit for tax purposes, so all of the things you mentioned would be OK, and a few others as well - just don't try to deduct too much. Expensive items are considered capital expenses, for which you claim a certain amount of depreciation each year, rather than being able to claim the whole amount at the start.
The other thing to consider is National Insurance contributions. As an employee you will pay Class 1 contributions - this will be dealt with by your employer. As a self-employed person you are required to pay Class 2 and Class 4 contributions if your earnings exceed certain limits. Class 4 contributions are calculated along with your tax bill, but Class 2 are a fixed weekly amount (not much, about £2-£3 a week), and you will need to get in touch with the Inland Revenue so that you can start paying.
If you are an employee as well as being self employed then you have to pay Class 1,2 and 4 contributions. As far as I can tell you will end up paying more than if you only had one type of employment - somewhat unfair, but that's the way it is.
Maybe they will tax us for our deaths soon who knows.
esllou, depending on how much of the income you need to survive on - there are lots of things you could do. Talk to a good tax expert. There are options that you are well placed to exploit as you aren't already in the UK. Also, you can set up an offshore company, have the Adsense cheques go directly to the company and "borrow" money from this off-shore company for your UK living expenses (or find other ways to route it to the UK. Find a way that keeps you on the right side of money laundering. Think "assets"). Then, there are trusts, again offshore.
Tip: Don't buy an offshore company from a UK based firm - they have books that are audited by UK accountants/auditors, VAT records that are inspected by the erstwhile HMCE, occasional inspections by the IR - all of whom can see who their "customers" are.
The tax here is getting ridiculous. With VAT, corporation tax, income tax like PAYE and NI* (I pay both employers' and employee's NI!), and various others - like business rates on the premises - I must be paying 80% of what I earn.
*Yes, that's income tax. Did you really think it was "insurance" of some kind?
If you are trading in the UK check out Limited Liability. You have a few more accounting options if you are an LTD. Further, it's easier to sell the business and, should someone sue you, you don't go bankrupt.
>>Maybe they will tax us for our deaths soon who knows.
You've got both the famous certainties in there ;)
If you do it yourself the IRS have a good online tax form submission system and you don't have to complete it all in the one go. They give you a log on and you can save the online submission form as often as you like until you are ready to submit it. The advantage is that you can get help with every every field as you complete it.
If you are working from home, part time or full time, you can claim an allowance against part of your heating lighting, power, etc. You can also claim part of your mortgage but this is not recommended because it means that your home can be classed as a business asset - not advisable! Also, the more you try to claim the more likely you are to be investigated.
If your earnings come from your PC and Internet connection you can claim for these too. BTW Google Adsense earning MUST be declared as income. At any time in the future Google could start telling other countries' tax authorities who they are paying. You don't want to be hit with that kind of a bill.
Anyway, why should you be entitled to earn money from any source without declaring it? It goes without saying that all earnings should be declared. This is no different from the plumbers, joiners and electricians who get hit by LARGE tax bills after being caught working on the side. All it takes is one unhappy client and your tea's oot :(
>>It goes without saying that all earnings should be declared.
They'd like you to declare it all but the statement is misleading. You are obliged to declare what you earn in your personal name and what you earn from companies here and abroad. This includes benefits in kind. You are not obliged to disclose that which are not not legally obliged to disclose.
tax doesnt have to be taxing
Well i guess they must have had a laugh when they made that up...
I was talking to someone else they said you have to tell them about all your assets, but if you make under 45,000 in the year then you dont pay tax or VAT?
Some how i dont think that one is true... Ive not done a tax return yet But I guess next year will be my first!
Please read as:
You are not obliged to disclose that which you are not legally obliged to disclose.
Sorry.
At £45K VAT registration is optional. Tax is payable on everything, mate. Even personal allowances. Yes, even personal allowance. Don't believe the BS governments peddle. Dig deeper. It's only income tax that you don't pay on personal allowances.
And anyone heard the joke about the chancellor who couldn't do percentages? Last year NI increased from 10% to 11% and he called it a 1% increase. I keep calculating and recalculating it and still keep getting the answer that it went up by 10%. :(
But, let's keep politics out of this or the thread will get deleted.
Back on topic:
Tax situation in UK for webmasters
UK webmasters leave the UK :)
lets say I find a company that will pay me through paypal would that work? ie. would the UK have to know?
All of your computer equipment, hosting fees, domain costs etc etc can be reclaimed from tax. If you are VAT registered you can claim that back for business expenses too.
As mentioned before you are also limited in your liability in that your cmpany takes the hit if you go bust rather than you personally.
lets say I find a company that will pay me through paypal would that work? ie. would the UK have to know?
As was said before, if you live in the UK you are obliged to pay tax on all your income, above the minimum threshold, and by whatever method it is paid. You are obliged to declare it on your tax return.
Note: WebmasterWorld cannot provide advice, only opinions. You should consult a TAX expert for advice.
Anyone heard of the Kuwaiti Investment Office? One of the biggest players in the city and the UK stock market, one of the biggest earners in the UK, and one with more than a few billion in assets? They pay £0 in tax every year. Why? Because of their affiliation with the Kuwaiti diplomatic mission (and the fact that foreign governments aren't taxed).
Think clever. Find a soviet republic of central africa, do a deal with them, give them 1% of your company. Find a country in outer mongolia and offer to be their UN representative. Or go offshore. Don't do it by risking a jail sentence.
Yes i understand Macro.
I will follow all this up, I like the sound of the 'The Limited Company route ' I will look into that aswell.
Will the Inland Rev. give me advice what to do if i phone them up?
You may also be able to class directory listings, link purchases and advertising costs as expenses.....Also business trips both home and abroad.
Anything above 31,400 pounds and you're looking at paying tax at the higher rate (40 percent) so it's woth investigating everything you can claim for.
call an accountant and get professional advice
Im just going to phone the inland rev for advice.
Ive got to say thanks this helped me learn more about tax and thats good :)
Regarding the possibility of avoiding NI contributions by paying yourself in dividends from a Limited Company: I would suggest that you do a Google search for 'IR35' first.
Secondly if you have multiple clients and are genuinely a business, in business on your own account you do not fall under this umbrella.
Don't let people scare you, talk to an accountant
So if you earn it abroad and leave it offshore then you have no liability on it - until you bring it, or part of, into the UK.
There may, technically speaking, be some tax consequences in the country you earnt the money but unless you are physically there this is probably only theoretical.
If I live in Country Yellow, have a passport and bank account in Country Blue and direct all my internet earnings to that bank account, then the Yellow tax man can't touch me. Can you confirm that, to your knowledge?
(don't worry, I KNOW you are neither lawyer or accountant and I will not call you as a witness for any of my trials! :-))
