Advice regarding paying tax

toontastic

I understand from reading other posts that don't have to fill in a self assessment form unless one is posted out but I thought I should check this anyway.

I currently run a website which is very busy and costs a fair few quid to run. Because of this we have banners and the odd product which we sell (we don't own the products we just sell them on the site and take a referell) the server costs us £91 every 2 months and we make just over £100 from the site every 2 months however this is on the up. Should we be paying tax on this and how do we go about doing this ?

Thanks.

toontastic

Thought I should add this isn't my job more a hobby, I have a full time job which I pay tax on my wages.

Also on a side note what about selling stuff on ebay when should tax be paid on that ?

CIS

If you haven't had a tax return posted to you then, if you have extar income to declare, you must request a tax return form. Under the law the HMRC aren't responsible for collecting it, your responsible for paying it.

If you have income for the tax year 2005/06 that you have not declared , the deadline is the 31st january and you may be fined for not declaring it.

Are you regidtered Self employed ?, you need to be to sell as a business unless you are an employee of a limited company. You only have 3 month from beginning to register self employed without incurring penalty charges.

toontastic

No no I don't sell anything (selling was the wrong word) it's more like referrels so there is a link on my site to amazon and then people follow that link and I get 20p or something like that. There are about 15 people running the site but none of us see any of the money it all pays for the server and the other runnings of the site.

pchelpman

CIS makes good points there.

Motto is .... be VERY careful what decisions you take.

You may think your web activites and ebay selling are either/both "hobbies" but the Revnue might think differently if they were made aware of the full facts.

You say you are not "selling". This word is immaterial. You are receiving a monetary reward for something and those activities may be classified as "trading".

There are essentially 6 indications which - taken together as a whole - will determine whether or not you are viewed as "trading" for tax purposes. This gives excellent descriptions of the 6 elements of this known as "badges of trade"....

http://www.lexisnexis.co.uk/taxtutor/pdf/free_pdf/2a01.pdf

Also the Revenue has said they are looking much more closely at folk who buy/sell on ebay in the light of these badges.

That said, there may well be additional expenses you can claim against those incomes. Perhaps they will even turn into losses where tax is refundable.

toontastic

Thanks for that pchelpman great help, i'll read through that see what we have to do.

toontastic

So would the website not be covered by point 1.3 ? Who would be the best people to speak to about this just I'd like to get it sorted in case the site does eventually make a profit though I doubt it ever will (got to pay for fixture lists which costs about £360, plus license the news posting software and then theres the server)

pchelpman

toontastic wrote:

So would the website not be covered by point 1.3 ?

Not sure what you mean here.

1.3 lists all the badges of trade. You need to view them all - not just one - and take them "in the round".

If your activities are not for profit - at least at this stage - then you may well be conducting a "hobby" but there are other things to condiser.

For instance ... Norman Wisdom, the entertainer. He once purchased some silver bars as an "investment" but the Revenue were having none of it. They sucessfully argued in the courts, based on the 6 badges of trade, that he was trading. The result was larger tax bills.

Self assessment means what it says - you must decide for yourself (with professional advice if you wish to take it) whether or not your activities amount to "trading". Obviously you must notify the Revnue of any trading within the stipulated time limit.

toontastic

Ok, sorry got a bit confused there, think we might just stop the referrels and pay out of our own pocket can't be doing with all this tax assessment. Thanks for all the help.

CIS

Your tax assessment would be quite simple , basically income - costs.

If your making a loss, it can be offset against your employed income and should result in a tax refund.

pchelpman

CIS wrote:

If your making a loss, it can be offset against your employed income and should result in a tax refund.

Agreed. That's why I made the comment I did at the end of post #6.