Paying taxes on online work.

boneheadgogo

I've been on benefits for a while but have just found a part time job that I'll be starting in 2 weeks.

Whilst unemployed I came across a couple of good websites for making money but didn't bother trying them as I was claiming benefits and didn't know if I could make enough money to support myself by just doing this so didn't want to sign off.

Now that I have a job I'm thinking of giving them a try the only thing putting me off is the whole tax thing. I'm hoping to make about 50 or 60 pounds a week to begin with maybe more.

I've never been self employed and know nothing about taxes so how does it work. I know I'd have to fill out a tax form but then what, I'd be getting paid via ebay so obviously the money I earned would already have paypal fees deducted from it, will that be taken into account, also will I need to prove how much I'm earning and how? And when do you pay your taxes do you pay them monthly or do you have to keep money aside and you get a bill at the end of the year or something, I really don't have a clue.

So as much info as possible would be appreciated, thanks

Mikeyorks

First you need to register with HMRC (within 3 months of starting - otherwise you get a penalty). If you're starting now - your first tax return is to April 2011. You have until Jan 2012 to do it (online - shorter period if you [unwisely] opt for paper) .......... and any tax on the profit (so you can deduct allowable expenses such as Ebay fees) is then due 31st Jan 2012.

But - do watch that you may have to make a payment on account of the following year at the same time. But only if the tax due exceeds £1k (self employed only) or - in your case - if your self employed tax is more than 20% of your (self employed + PAYE tax)

It's more straightforward than it sounds at first glance. If you read through these links it should gel :-

http://www.hmrc.gov.uk/sa/your-tax-return.htm

boneheadgogo

If i don't have to pay it until january how will I know how much to keep aside to pay

Mikeyorks

You will have tax + some NI to pay. If you're comfortably (in your PAYE job) under the 40% threshold (£43875) ........... then put 30% of the profit to one side.

As all your personal allowances will likely be taken up by your day job then you will pay 20% tax + (possibly depending on profit level) 8% NI