Tax/NI payments where to start?

K33k00

I have had search around and seen some articles but all of them just leave feeling confused and uncertain.

Basically i have a full time job earning roughly $18500 (sorry american keyboard at work,should be gbp)

I, like everybody else, need more money. So I started to learn programming and have a few ideas that i think could be quite helpful to people.

Now i am better at programming i am going to write these programs.

Now to the actual question/s.

Q1. If i offered the software for free and gave people the option to give me money, as a gift/ way to say thanks. Would i have to pay income tax and national insurance.

Q2. Lets say i wanted people to outright pay for the software using paypal, how would i declare income and pay the NI.

Q3. Probably a bit of a trickier one, if people were to pay using bitcoin would i still need to pay Tax and NI.

Q4. I read about self employment and also being fully employed on HMRC and was left confused. Is this the best option. If so what do i do to set up? what cost is involved in setup?

Bear in mind i could make this software and no one may want it hence no money being made.


If my questions leave you feeling confused please ask me to elaborate instead of ignoring them

Thanks


PS. I feel like i should add. I am not expecting to make loads of money... but you never know i guess.

Kayalana99

Its really simple any money that you recieve through any method.. is 'income' any money you spend is 'purchases'

You simply keep a record Income - purchases = the amount you tell the tax man.


Not sure about the whole gift aspect...personally would still think that as income, but *if* HMRC were to get invovled I don't think they would quite believe you if you said it was a gift... >.>

kangar78

You register self employed as a software developer, its free. You then record all income and all expenses related to your self employment (computer, software, coffee etc.) and file a tax return online with this information by January 31st each year accounting for the tax year (starts and ends 5th April).

This tells you instantly whether you owe tax or not.

Easier than it sounds. HMRC send you postal reminders.

K33k00

So if i set up as self employed and have no income and have no purchases, would i still need to do a tax return?

does the tax return include national insurance or does it not matter due to having a full time job?

edit: Just read about class 2 NI. would i need to pay that?


sorry if i come of as being totally dumb. I just want to make sure i know everything i need to before going any further and questions just keep popping in my head!

Kayalana99

Not sure of the exact figure but its between 5-6k, that if you earn over that then yes you would if not you need to opt out of paying though.

If you didn't make any money I think you'd literally just log in and put income 0 purchases 0 profit 0.. (I do mine online)

K33k00

Brilliant thank you very much! i dont think i'll ever hit 5-6k so i should be safe there.

kangar78

I may be wrong but I'm pretty sure the tax threshold has actually been highered to around the 9k mark. Again, I may be wrong.

Your tax return will take care of the NI too. And yes, log in and input 0 income and 0 expenses.

niftyone

A good place to post these sort of questions is the Tax Forum where the Tax Peeps hang out.

http://forums.moneysavingexpert.com/forumdisplay.php?f=22