being paid in USD to paypal

KathF

Ok so ive read conflicting things on net and forums but

say i get paid x amount in USD, paypal take a fee. i then have to pay 33% of the total ( before pp fee) to the platform so i pay that from the USD. the remainder i then convert to GBP as my earnings
do i have to put all this on tax form as turnover, profit/loss, foreign income etc etc or can i just put the amount in GBP after the charges and fees , i wouldnt be putting these charges and fees on as expenses or any where on the SA form so wouldnt be claiming tax relief for them. is that ok?
i read someone was told by HMRC that they just had to put the GBP they transferred to bank but thats obv not right as people use paypal to pay for things. but if i only use that account to recieve payment, pay the platform charges and paypal fees then withdraw the rest am i ok to do that?
thanks in advance

Pennywise

KathF wrote: »

can i just put the amount in GBP after the charges and fees

No. It's important that your accounts/tax return declare the full turnover, i.e. the amount paid by your customer. All the other deductions need to be shown on your accounts/tax return as expenses. You can't just show the net amount after expenses as your turnover.

Cook_County

The net received is certainly not turnover. You need to prepare true & fair accounts in accordance with GAAP to be able to prepare your UK tax returns.

KathF

ok thankyou

KathF

ok so the paypal fees and the charge for the platform of 33% , i actually convert payment immediately so can get the correct exchange rate at the time so will be able to work those out in GBP but where on the form do i put those? are they just under expenses? or some where else?
thanks again xx

Cook_County

KathF wrote: »

ok so the paypal fees and the charge for the platform of 33% , i actually convert payment immediately so can get the correct exchange rate at the time so will be able to work those out in GBP but where on the form do i put those? are they just under expenses? or some where else?
thanks again xx

Before preparing a tax return, you prepare accounts first based on your bookkeeping records.

KathF

yes im keeping my records, im using excel for two sections of dollars and the one equivalent in stirling so have turnover, paypal fees, platform 33% fee, then net in dollars on left of page, center i have the currency exchange rates and then on right of page i have the converted amounts of turnover, paypal fees, platform 33% fee, then net , all in £ values, ive also saved the screen shot of the exchange rates when ive converted payments as i do convert each one as i get them so i have accurate details. the way they advise of doing it monthly or even as hmrc say yearly then having to adjust the profit/loss because the exchange rate would be very different doing like that is just more complicated for me. so i prefer to record the rate at the time of exchange and log that. paypal accounts show all the fees and such they charge but you have to click links to get all the exchange rates used so im saving as i go. but when it comes to filling the SA in. i put gross £ turnover in a box ( still dont know which one lol) then i have work from home costs which i put in expenses. then the fees for paypal and the platform fees where do they go? what worries me is the 33% platform fees are large so HMRC may query that. from what ive been told on the site most in USA have been told by there accountants to just take the amount after the platform fees are paid as the turnover but not sure how that works over here

agrinnall

The key thing that US people on the site are saying is that they have consulted accountants - it would seem to be a very wise move for you to do the same, at least for the preparation of your first set of accounts and tax return.

The other thing to consider is whether you need to complete any documentation for the IRS, which you may have to if the work has a US component. You might not have to pay any US tax, but you'd have to complete the right forms to ensure that (the W8 form is often mentioned).

KathF

hi thankyou for the reply, i was considering an accountant for my first SA but couldnt find out if the full cost is taken off the profit or only a percentage of the cost for taxes
i have filled in the W8 forms already so im covered that side xx

Savvy_Sue

KathF wrote: »

hi thankyou for the reply, i was considering an accountant for my first SA but couldnt find out if the full cost is taken off the profit or only a percentage of the cost for taxes

Your first consultation would normally be free, just to see if you get along with each other and ask about charges, so that would be the time to ask that kind of question.

I do think you need help!

KathF

lol i have to agree i definitely need help with this one my heads spangled, i need to stop reading net its confusing me lol
but i do appreciate the responses and help , so ty everyone