Going self employed and registering late

pringles

Hi

I'm looking for some advice in going self employed. I'm currently full time employed (and plan on continuing being full time employed) but have had a hobby of running websites for several years now.

After a while I started earning money from these websites (under 4k a year).

I'm sure I should be paying tax on these earnings, but am a bit worried about what the consequences are of contacting HMRC and declaring myself self employed at this late stage. Could I get a hefty tax bill which I would have to pay immediately, plus several years worth of backdated NI contributions? or worse??

If I declare myself as self employed as of now, are they likely to check previous years?

Can anyone suggest what steps I should take...

Any advice / suggestions would be greatly appreciated.

Horace

Ideally you should have registered your self employed business when you started earning. You will probably get a fine but you would need to speak to the HMRC to find out..https://www.hmrc.gov.uk - they are usually quite friendly.

How about saying that you have just started your business and that you expect to earn x from it?

PlutoinCapricorn

Other people have asked similar questions. The answers vary: if the amounts are small then it is often suggested that you register with your trading start date set to the time when you decided to turn your hobby into a business. Lets sleeping dogs lie and all that.

Until quite recently you got 3 months' grace to register, but now HMRC expect you to declare yourself self employed as soon as you have some definite work. There is a £100 penalty for late registration, but they may waive it.

How many years are involved, and how much income was there? Did you spend a lot on setting up? Have you got records of all income?

If you decided to declare everything, there would be no back payments of class 2 and 4 NI if you were under the minimum limit each year: the bands change each April 6th. You would probably have to pay income tax and perhaps a penalty for late declaration also interest, but by coming forward and cooperating you might get some of the extras reduced. Why not wait and see what the experts say before deciding anything.

Debt_Free_Chick

A hobby is not employment, unless you are undertaking the hobby with a view to making a profit.

Whilst HMRC can't prove what you intended the hobby to achieve, I wouldn't have considered that an income of "close to but under £4k" would be classed as a simple hobby. What's the relevance of £4k a year - are you making a profit of close to that amount?

magicgirl

best to check. shouldn't be a hge tax bill and if u are earning less that a certain amount, there is no NI to pay. i can't rememebr teh amount though so you will have to check.