Paying Tax on American Earnings

wellbored

Evening all,

I currently work full time in the UK, live in the UK and pay tax like everyone else on this job. However, I also run a website in my spare time which is starting to generate a decent sized income.

Any income the site generates comes from America via means of a bank transfer or cheque. I am looking to start registering this extra income so that I can pay tax and keep everything legit.

Anyways, to the questions :-)

1) Do I have to register as a sole trader even though I have a normal job? If so how do I go about declaring these earnings and do I have to inform my current employee of anything?
2) Is anyone in a similar situation and could spare some time to guide me through it?
3) Is there anyway of legally dodging it hehehe :-)

I'd really appreciate any help with this as I want to get it all sorted at the start of next year.

Thanks for reading,

Darren

Toni_Tax

wellbored wrote:

1) Do I have to register as a sole trader even though I have a normal job? If so how do I go about declaring these earnings and do I have to inform my current employee of anything?
2) Is anyone in a similar situation and could spare some time to guide me through it?
3) Is there anyway of legally dodging it hehehe :-)

Hi Darren,

1) Yes you do need to the Revenue. The self-employed helpline number is 08459 15 45 15 or you can write to your Revenue office (reference on the payslip provided by your employer). If your self-employed gross profit is under £15K they will request that you complete a 'Short Tax Return' which is much easier than a normal Tax Return. You may be very lucky and, if your income/expenses are very minimal, they might let you get away with completing a simple form each year. Worth asking them?
2) If you have any other questions you want to add to this post I will check back.
3) I think you know the answer to this is No ) -However you can of course claim all of your business expenses which will substantially reduce your profit and tax. Here are some of the things you can claim for if they are applicable:

• Capital Allowances (depretiation) on your computer/printer/scanner
• The business proportion of your internet access/telephone costs
• postage/stationary
• The cost of any tax advice you receive (I'm free but I can provide dodgy invoices for a nominal fee..... joke!)
• Also, the cost of using a room in your home as an office. If you own your own home, be careful not the claim that the room is used for business 100% of the time as this can affect your Principal Private Residence relief when you sell your home. Instead, say you use one room for business X% of the time. There is a complicated calculation to work out the cost which I will go into if you want me to but the Revenue will accept, for example, £10 per week as an estimated cost towards your rent/heat/light etc.

Hope this helps
Toni

wellbored

Hi Toni,

Thanks for replying, you've been a great help :-)

Just a couple more questions please if you dont mind:

1) Will I still be able to get the short tax returns even with my full time job? From what i've read on it today it seems as if its only available if your self employed and earn less than 15k? (my full time job already puts me over that threshold)

2) Do i have to pay a second lot of national insurance, or do I just have to worry about paying 22% of whatever the site earns?

Thanks again,

Dazz

Toni_Tax

Hi Dazz,

It defo is the self-employed earnings (gross before expenses) that need to be under 15K for the short return, your employment income should not matter (although it will need to go on the Return in a different box).

You should be paying Class 2 NI, which is a flat rate of £2.10 per week and Class 4, which is 8% of net profit after a deduction of £5035 (and 1% over £33,540). BUT you can claim an exemption as you are employed you may already pay enough Class 1.

I don't deal with NI so you will need to ask your tax office about this and which forms to fill out etc.

Regards
Toni