Advice Needed. Self employed and not paid tax for 3 years

Brightspark87

Don't forget - you need to be paying National Insurance too its not just income tax.

https://www.gov.uk/self-employed-national-insurance-rates

TheDebtinator

*~Zephyr~* wrote: »

It's impossible to say exactly how much tax you owe without more info. You have to deduct your personal allowance for each year and that varies each tax year. You give dates, but do those dates equate to tax years? I.e. when you say '2013' do you mean tax year ending April 5th 2013?

Assuming that is what you mean, personal allowances (PA) were:

2013: 8105
2013: 9440
2014: 10000

SO with earnings of:
2013: £21,000
2014: £4,600
2015: £3,000

Your taxable income would be:

2013: 12,895
2014: 0
2015: 0

This is assuming that you have no other income from elsewhere (i.e. paye jobs).

That being the case, you're looking at a tax bill of 20% x 12,895 = £2579.

But, if you have any allowable expenses to be applied, this will reduce your tax bill.

Hope this helps somewhat.

I believe the OP has a PAYE job as well, which means that they are liable to pay tax on every penny earned from this second income, meaning it will be over £5000 for the tax bill.

andyfromotley

Hi,
any competent local bookeeper/small business tax adviser will be able to sort this out for you quickly easily and when talking about these smal enterprises their knowledge of what you can claim for etc has ime roughly offset their charges.

You can do it yourself but tbh life is just to short sometines.

andy

ryan871

yes i have a primary PAYE job, over 10k salary.

These are earnings by tax year:
2013/14: £23,000
2014/15: £4300
2015/16: £2300 so far (not due till next january i believe? )

so all will be taxable, im guessing around £6000 roughly before fines ?

i work as an affiliate but for several companies (amazon affiliate / clickbank and a few others)
will they need to know detailed info about earnings from each? or is their only interest the money owed. I use same payment method for all so will be very difficult.

*~Zephyr~*

TheDebtinator wrote: »

I believe the OP has a PAYE job as well, which means that they are liable to pay tax on every penny earned from this second income, meaning it will be over £5000 for the tax bill.

Ah, missed that! Thanks for pointing that out!

OP - you need to start collating receipts for all your expenses relating to the affiliate work pronto to reduce the tax liabilities. And get a separate bank account!!

And you'll need your P60's and any P11D's from your PAYE job for the relevant years too.

You'll have to do a return for each tax year separately. And yes, 2015/16 must be done before 31 Jan 2017, but there's no reason not to do it earlier if possible. I do mine in May usually (but I do about 35 of them for lots of different people so I need to start early!)

Helvetica_Van_Buren

ryan871 wrote: »

so all will be taxable, im guessing around £6000 roughly before fines ?

Just to be clear, there's no guarantee that you WILL get fined, just that there is a possibility until this is sorted.

ryan871

gonna go into the bank in the morning and open a secondary account.

Also all my payments we're in USD but then it is converted to £ on bank transfer.

I have been reading this document CC-FS11 (cant post link)

and if i go to them about this (Non-deliberate / unprompted disclosure) im probably looking at a 10-30% fine i think

greensalad

HMRC doesn't care where you made your money. They simply car about how much profit you made.

You will need to get an accountant for this. They are not that expensive.

Is it correct that in your first year you earned £21k as an affiliate (on top of your PAYE job) but then only £4,600 the following year? What happened?

Also, if your PAYE salary is over a certain amount you may be liable for higher-rate 40% tax on income over. Depends how much your other job earns.

Your first year you made a lot of cash, so expect a large chunk of the debt to come from that.

I would expect that you can set up a payment plan for this amount so don't worry about it too much, I don't think they'll demand the full sum as long as you go to them first.

macca1974

I'd agree that on your figures you are probably looking at £6K ish. Regarding the potential for a fine, I had a slight difficulty with HMRC about 4 years ago where I had genuinely made a mistake on my tax return and paid about £2K to little in tax. I sent evidence proving I was right and as it turned out...I was wrong. Speaking to the lady from HMRC, she told me that because she believed it had been a genuine error then she would "only" be applying their minimum fine of 25% of tax due. Not sure if this has changed (although I can't believe that it would have), I would budget for at least a 25% fine on top of whatever the tax that is due.

This is a lot of money that you are going to owe, so a trip to a local accountant is going to be more than worthwhile. Especially regarding allowable expenses.

I'd have thought you'd also need to see what you can do to get your audit trail in order. As if you have lots of money coming in and then leaving your personal account, you need to be able to identify what was an allowable expense and what wasn't. If you get this wrong you could end up with an even higher tax bill.

ryan871

greensalad wrote: »

Is it correct that in your first year you earned £21k as an affiliate (on top of your PAYE job) but then only £4,600 the following year? What happened?

I put a lot of time and effort into it the first year and made rank 1 on google. Then earnings dropped as i had not much time. Its not a stable income.

macca1974 wrote: »

I'd have thought you'd also need to see what you can do to get your audit trail in order. As if you have lots of money coming in and then leaving your personal account, you need to be able to identify what was an allowable expense and what wasn't. If you get this wrong you could end up with an even higher tax bill.

Im going to open a new bank account shortly for any business transactions.