Forum Moderators: martinibuster
I signed up to Adsense a while back now, but for ages I was unable to see any earnings (All < $10 of it!) as I had not entered my tax info. One night last week I pulled out all my tax info and sat down at my computer but then found that I didn't need to submit any details as I live in the UK.
What do I do now? Who should I inform? I have my flagship site going live in around a month and would like to get all this sorted just incase I become a billionaire ;)
Cheers
PH
If you have a day job but AdSense is extra income you must fill in a tax return (go see the Inland Revenue to register - they're generally quite helpful). You must then declare your extra earnings on the annual self assessment tax return.
If you're making 5K+ a year it might be worth setting up a limited company. I do this with my AdSense, as it's more tax efficient and you can claim business expenses etc. Go talk to a small business adviser or accountant about this, although running a company in the UK is not as difficult as you would think.
There is the temptation to hide earnings from the tax man, but you'd be in big trouble if he finds out (last week I got a £100 fine just for sending back a form 2 weeks late).
As DrGUID mentioned, I think I'm going to set up as a company this year to better manage my web income / expenses.
Have a look at [hmrc.gov.uk...]
usual disclaimer - I'm not qualified to say any of this, and look into it more yourself, etc :)
"Half my hard earned cash" + "every quarter, pay additional NI contributions."
That seems rather excessive?! I know we get taxed loads compared to some countries but HALF? I work full time but my taxes don't add up to half!?!
Such As
All computer equipment - for obvious reasons
Hosting Costs
Domain Purchases
Software Purchases
Business Travel (I find it best to use the mileage allowance if you do under 10,000 business miles a year)
Stationery & Consumables
Business Mobile Phone
Conference Expenses (inc Travel & Hotels)
Home Office Heating & Lighting (you can claim a %age of your Utility Bills)
When you start adding it up, it can save you paying a considerable amount of tax.
However you need to remember that if you get to a turnover over £58,000 per year you will need to register for VAT - at which point you should ensure that you have a fairly competent acountant.
That seems rather excessive?! I know we get taxed loads compared to some countries but HALF?
Actually, the way I calculate it the tax is over 90% of what I earn. See my posts in this thread [webmasterworld.com].
If it looks like you may become a billionaire then setup a Ltd Co ASAP.
The first choice above is if you get a cheque for £60 ish if your in the hundreds then do it legally and kindly hand over 20% to that bloke Mr Income Tax, BUT dont forget to declare all those BIG EXPENSES TOO being Ltd will save you plenty.
Er, speak to your accountant. You may need to get a third party to "gift" the money earning asset (website?) to your kids if you want to avail of this... and, even then, it's of limited use.
those are legitimate costs of doing business and are rightfully to be deducted
I totally agree, but it is surprising how many people who are 'hobby' webmasters earning money from part-time work will overlook such legitimate expenses.
I was trying to point out that if you are earning money from your websites you need to be looking at them as a business rather than a sideline, and as such should be making best use of the tax deductions available to businesses.
