Declaring paypal fees on tax return?

monster30

I'm self-employed, and get some of my income through Paypal. I understand that you need to declare the entire amount of money you received through Paypal, inclduing fees, and then claim the fees back as expenses to keep on the right side of Mr Taxman (rather than just declaring your net income and ignoring the fees).

However, some of my payments come through in dollars, so the fees are listed in dollars. How do I declare, say, $23.45 on a British tax return?! The amount is never converted into pounds as it is just removed from the dollar payment before it reaches my bank account. Any ideas?

Richard019

monster30 wrote: »

I'm self-employed, and get some of my income through Paypal. I understand that you need to declare the entire amount of money you received through Paypal, inclduing fees, and then claim the fees back as expenses to keep on the right side of Mr Taxman (rather than just declaring your net income and ignoring the fees).

However, some of my payments come through in dollars, so the fees are listed in dollars. How do I declare, say, $23.45 on a British tax return?! The amount is never converted into pounds as it is just removed from the dollar payment before it reaches my bank account. Any ideas?

Do you have all 3 of these figures:

Total value in $
Fees in $
What you received in £

monster30

Yes - a typical transaction might be $300 total value, $20 paid in fees, £240 received into my current account.

Richard019

monster30 wrote: »

Yes - a typical transaction might be $300 total value, $20 paid in fees, £240 received into my current account.

It's quite quick to work out then (I've used 6 cells on Excel):

$20/$300 = 6.67% in fees.

£240 = total amount minus 6.67% in fees = 93.33%

£240/93.33% = £257.14

Total transaction amount on your form: £257.14
Paypal fees = £17.14

The only discrepancy they could find with that is if Paypal are applying a commission on top of their fees for exchanging currency. I really can't see them having an issue if that were the case though as your tax would still be correct as it's worked out from profits and you have at least done everything to show them the true figures.

monster30

Richard, many thanks. It hadn't even occurred to me to use percentages, the only thing I could thing was to use the currency exchange rate which would have been difficult as it fluctuates so much. Thank you!