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    • token101
    • By token101 19th May 17, 3:16 PM
    • 2Posts
    • 0Thanks
    token101
    Tax for freelancing on the side
    • #1
    • 19th May 17, 3:16 PM
    Tax for freelancing on the side 19th May 17 at 3:16 PM
    Hello,

    I've just started accepting some small freelance online marketing jobs on top of my regular job. I reckon I'll probably take an extra 2-3k a year overall from this, but trying to figure out my tax liabilities. I've registered as self employed on the Gvnmt Gateway, so do I just fill in a tax return next year with this income only? If I need to invest in things like websites, online advertising, etc, can I deduct those from any tax I pay?

    I've also read about a new a new tax allowance for side income which came in this April. Is that income dependent? Presumably if I don't go above the 1000 I don't declare anything and only pay tax on the the additional income?

    Thanks
Page 1
    • Pennywise
    • By Pennywise 19th May 17, 3:25 PM
    • 8,706 Posts
    • 15,390 Thanks
    Pennywise
    • #2
    • 19th May 17, 3:25 PM
    • #2
    • 19th May 17, 3:25 PM
    Yes, you put your total income on the self employment pages, and your legitimate business expenses. Things like advertising your business are clearly legitimate, but you can also claim a realistic proportion of other costs, such as telephone, use of home as office, etc. Also mileage for any wholly business journeys (or public transport fares etc). You just can't claim for personal stuff (like normal clothing, medical costs).

    As for the new 1k allowance, I don't think it has actually been enacted yet. It was supposed to come in this April, but the law hasn't yet been passed to make that happen.
    • sheramber
    • By sheramber 19th May 17, 3:57 PM
    • 3,164 Posts
    • 2,426 Thanks
    sheramber
    • #3
    • 19th May 17, 3:57 PM
    • #3
    • 19th May 17, 3:57 PM
    Hello,

    I've just started accepting some small freelance online marketing jobs on top of my regular job. I reckon I'll probably take an extra 2-3k a year overall from this, but trying to figure out my tax liabilities. I've registered as self employed on the Gvnmt Gateway, so do I just fill in a tax return next year with this income only? If I need to invest in things like websites, online advertising, etc, can I deduct those from any tax I pay?

    I've also read about a new a new tax allowance for side income which came in this April. Is that income dependent? Presumably if I don't go above the 1000 I don't declare anything and only pay tax on the the additional income?

    Thanks
    Originally posted by token101
    You need to enter ALL your income on your tax return- both your regular job and the freelance one. Also any other source of income you have.
    • token101
    • By token101 19th May 17, 4:57 PM
    • 2 Posts
    • 0 Thanks
    token101
    • #4
    • 19th May 17, 4:57 PM
    • #4
    • 19th May 17, 4:57 PM
    Thank you both for your help.

    To clarify, do I only pay this tax once I fill in this form next April? Do I need to do anything in advance of that? If I do a self assessment and decide I owe nothing after expenses on 2000 of income, what happens then? Someone audits it and checks?

    When you say "legitimate business expenses", is there a clear threshold on what they would consider legitimate? For instance, if I decided to take 1000 of my 2000 earnings and spend that on a website, is that 1000 tax exempt because it is a clear business expense?

    What about things like a laptop, wifi, etc? Could I claim a certain amount of those things back as well given they are facilities I need to use to operate the business, even though I work from home? I think I heard I could claim 21% of the cost of those things on the phone with HMRC, although I wasn't certain on that and it seems quite arbitrary?

    Sorry for all of the questions, but just want to be sure I'm maximizing my savings whilst not doing anything dodgy!
    • Dazed and confused
    • By Dazed and confused 19th May 17, 6:50 PM
    • 1,279 Posts
    • 512 Thanks
    Dazed and confused
    • #5
    • 19th May 17, 6:50 PM
    • #5
    • 19th May 17, 6:50 PM
    To clarify, do I only pay this tax once I fill in this form next April? Do I need to do anything in advance of that? If I do a self assessment and decide I owe nothing after expenses on 2000 of income, what happens then? Someone audits it and checks?

    You haven't mentioned a date but as you are referring to filling in a form next April I presume your business started after 5 April 2017 and if so you must submit the tax return (for 2017:18) by 31 January 2019 and any tax due would be payable then as well. It's also possible that you could have a payment towards your 2018:19 tax bill to make on the same day but this is unlikely on the figures you are quoting (google payments on account).

    You don't fill in a tax return for your business it's for your total income, as sheramber mentioned in a previous post you declare everything relevant which applies to you, job(s), business, investment income etc etc.

    You need to keep proper records, retain invoices etc as evidence of your expenditure and yes, it's possible you could be challenged on what you have entered (particularly if you don't bother declaring other income such as your principal job/source of income). Not sure exactly what happens now but you used to get a calculation showing your tax/NIC/student loan amount due based on whatever you put down on the form and HMRC had a year (i think) to decide if they wanted to ask any questions about your return.
    • Patrick Stewart
    • By Patrick Stewart 22nd May 17, 1:36 PM
    • 9 Posts
    • 2 Thanks
    Patrick Stewart
    • #6
    • 22nd May 17, 1:36 PM
    • #6
    • 22nd May 17, 1:36 PM
    I think if you are planning on spending 1000 buying a website this is something that would not be covered by your fee to whoever is paying you to do your freelance work. You are then taxed on that pay.
    So things like that are not legitimate things you can claim off your tax bill. When you fill in the form it says what things are acceptable, if its not on the list you cant claim it. Its only generic things like office equipment, laptop etc.
    I suppose its like someone giving you 5,000 for materials to build a shed and paying you a fee of 500 for your work, you cant claim 5000 tax off your earnings of 500.
    Last edited by Patrick Stewart; 22-05-2017 at 1:47 PM.
    • engineer amy
    • By engineer amy 22nd May 17, 2:53 PM
    • 575 Posts
    • 1,086 Thanks
    engineer amy
    • #7
    • 22nd May 17, 2:53 PM
    • #7
    • 22nd May 17, 2:53 PM
    I think if you are planning on spending 1000 buying a website this is something that would not be covered by your fee to whoever is paying you to do your freelance work. You are then taxed on that pay.
    So things like that are not legitimate things you can claim off your tax bill. When you fill in the form it says what things are acceptable, if its not on the list you cant claim it. Its only generic things like office equipment, laptop etc.
    I suppose its like someone giving you 5,000 for materials to build a shed and paying you a fee of 500 for your work, you cant claim 5000 tax off your earnings of 500.
    Originally posted by Patrick Stewart

    nonsense!
    Any expense that has been legitimately incurred in the set up and running of your business can be offset against your income for the purposes of calculating tax. The key words are "legitimate business expense" so if you bought a couple of Ipads and gave them to the kids at Christmas, then this is not allowed. But if you bought the ipad for work, took it round your clients to arrange quotes, show presentations etc then that would be an allowable expense.
    A website to promote your business is allowable regardless of cost (as long as you have proof of the cost). If your income is 3000, and you have expenses totalling 1500 (website, insurance etc) then you will only pay tax on the difference between income and expenses ie 1500.
    Say however that you spend 1000 on the website, but you only get a couple of jobs in your first year and your total income is 1000, then there will be no tax to pay as you have not made any money.


    Don't forget that your total earnings are taken into account from both employed and self employed income. so make sure you keep hold of your P60 from your job as you will need to provide tax and earning figures from it when completing a self assessment
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