Tax for freelancing on the side

token101 wrote: »

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

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.

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 wrote: »

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.

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