Paying Tax on Extra Income

C.Lightowler

HMRC can decide to open random enquiries into people's tax affairs so if you don't declare the extra earnings now it is possible for them to find out about it. If they open an investigation into your tax affairs they will ask for copies of your bank statements so if there is extra money coming into the bank they WILL find out about it.

If they do find out about it you will be liable to pay back the extra tax you owe, daily interest and a penalty which can be up to 100%.

So in answer to your question, there is no line. As soon as you earn any extra money that hasn't been taxed you need to declare it.

laticsforlife

C.Lightowler wrote: »

HMRC can decide to open random enquiries into people's tax affairs.

True but highly unlikely, usually targeted risk based approach as have to be seen to be targetting resources where they matter most (into serious tax-avoiders and evaders)

C.Lightowler wrote: »

If they open an investigation into your tax affairs they will ask for copies of your bank statements so if there is extra money coming into the bank they WILL find out about it.

True again and certain if enquired into.

C.Lightowler wrote: »

If they do find out about it you will be liable to pay back the extra tax you owe, daily interest and a penalty which can be up to 100%.

True but penalty likely more like 35% unless fraud suspected.

TM1976

The letter of the law is that you should inform them even of £200 income. If you start trading you need to inform them. If you make under £2,500 a year you still have to pay tax on it but you may be able to avoid self assessment by reporting this income by phone or by letter and getting your tax code adjusted.

I made £100 on a bit of work I did for someone this year and I'm going to declare it on SA tax return. If I was on PAYE I probably wouldn't bother - however this wouldn't be right.

What you are saying is a bit like saying " I shoplift a few things from my corner shop, I'm pretty sure it'll never get noticed but I'd like more. How much stuff do you think I could get away with stealing without getting caught?"