Confused with survey income regarding taxes.

dude7691

Hi There,

Living in the UK, 21 and a student. So I've been doing surveys/website feedback since November 2019, and made £1,758 between then and April. I lost my job in October 2019 and earned £10,500 from this job between April and then, so the online earnings would have pushed me very close to the tax threshold. This tax year so far (since April), I've made £1,939. This is all doing surveys and website testing, and I do it about 20 hours a week or so. I currently have no other income besides this. I only realised this once actually downloading my Paypal statements just today (how I get paid), I genuinely had no clue how much I was making except over the course of a week (and never kept records). You'd be amazed how a fiver here and there doesn't feel like it adds up, until you add it up It's definitely more than this because obviously gift cards, as well as bank transfers from some sites. My question is, do I need to register as self employed? It's not like I'm running a business, but I'm obviously making some money here (more than the £1k a year trading allowance).

I had a look and the deadline to register as self employed was 5th October this year. Any later than this, and I'll be fined for it (£100). I was reading some old MSE threads, and almost all the sites I participate on (except the website testing sites) and there was differing opinion on whether survey sites count as taxable income as they are classed as "rewards/gifts" or if they're actually real income. There's no contracts like you'd have in a job, I have no fixed clients and just do work as and when it's there, so I guess I'd be closer to a freelancer (if anything). 

Do you have to be registered as self employed to file a tax return? Because I don't think I'm self employed, but I might be wrong. In most cases it's treated as supplementary income. A landlord for example is not self employed, but does file one. I'm honestly just really confused. 

I'd like to add that I genuinely only looked today. I did actually try to do this maybe 6 months ago but Paypal's statements interface felt really complicated and I just assumed I wouldn't make enough, stupid of me I know. I'll pay no tax, but now I'm worried about being fined. 

Thank you

Jeremy535897

There is a lot of different opinion on this, but I think that the practical answer is that at some point you cross a line and it is self employment. That line is now probably set at the £1,000 de minimis for self employment income (assuming no other self employment). Unfortunately I think this means you should have registered as self employed by 5 October 2020, and the fine is automatic and not dependent on the tax due (even if no tax is due). The penalty gets worse the longer you wait (3 months late and a £10 a day fine starts to accrue).

Dazed_and_C0nfused

Jeremy535897 said:

There is a lot of different opinion on this, but I think that the practical answer is that at some point you cross a line and it is self employment. That line is now probably set at the £1,000 de minimis for self employment income (assuming no other self employment). Unfortunately I think this means you should have registered as self employed by 5 October 2020, and the fine is automatic and not dependent on the tax due (even if no tax is due). The penalty gets worse the longer you wait (3 months late and a £10 a day fine starts to accrue).

Aren't those the late filing penalties, not late registration?

Providing the op registers now and ensures any tax owed is paid by 31 January 2021 I doubt there will be any penalties levied.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

dude7691

Dazed_and_C0nfused said:

Jeremy535897 said:

There is a lot of different opinion on this, but I think that the practical answer is that at some point you cross a line and it is self employment. That line is now probably set at the £1,000 de minimis for self employment income (assuming no other self employment). Unfortunately I think this means you should have registered as self employed by 5 October 2020, and the fine is automatic and not dependent on the tax due (even if no tax is due). The penalty gets worse the longer you wait (3 months late and a £10 a day fine starts to accrue).

Aren't those the late filing penalties, not late registration?

Providing the op registers now and ensures any tax owed is paid by 31 January 2021 I doubt there will be any penalties levied.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

Hi there, 
Just wanted to ask that yeah, reading that it looks like it's a bit of a grey area. 

"If you have a new source of income on which there is a tax liability, you should notify HMRC by 5 October following the end of the tax year in which the income arose."
"If HMRC is not notified in time ‘failure to notify’ penalties can apply. These are based on the tax due and unpaid at ‘due date’ – normally the 31 January following the end of the tax year. The size of these penalties depends on taxpayer behaviour."

So I assume that means if you're very honest and polite they would understand as you've never done it before? I won't have to pay any tax I'm pretty sure although I'll go through my bank statements and double check now. 

Dazed_and_C0nfused

dude7691 said:

Dazed_and_C0nfused said:

Jeremy535897 said:

There is a lot of different opinion on this, but I think that the practical answer is that at some point you cross a line and it is self employment. That line is now probably set at the £1,000 de minimis for self employment income (assuming no other self employment). Unfortunately I think this means you should have registered as self employed by 5 October 2020, and the fine is automatic and not dependent on the tax due (even if no tax is due). The penalty gets worse the longer you wait (3 months late and a £10 a day fine starts to accrue).

Aren't those the late filing penalties, not late registration?

Providing the op registers now and ensures any tax owed is paid by 31 January 2021 I doubt there will be any penalties levied.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

Hi there, 
Just wanted to ask that yeah, reading that it looks like it's a bit of a grey area. 

"If you have a new source of income on which there is a tax liability, you should notify HMRC by 5 October following the end of the tax year in which the income arose."
"If HMRC is not notified in time ‘failure to notify’ penalties can apply. These are based on the tax due and unpaid at ‘due date’ – normally the 31 January following the end of the tax year. The size of these penalties depends on taxpayer behaviour."

So I assume that means if you're very honest and polite they would understand as you've never done it before? I won't have to pay any tax I'm pretty sure although I'll go through my bank statements and double check now. 

The important bit is this,

If HMRC is not notified in time ‘failure to notify’ penalties can apply. These are based on the tax due and unpaid at ‘due date’ – normally the 31 January following the end of the tax year. The size of these penalties depends on taxpayer behaviour.

dude7691

Dazed_and_C0nfused said:

dude7691 said:

Dazed_and_C0nfused said:

Jeremy535897 said:

There is a lot of different opinion on this, but I think that the practical answer is that at some point you cross a line and it is self employment. That line is now probably set at the £1,000 de minimis for self employment income (assuming no other self employment). Unfortunately I think this means you should have registered as self employed by 5 October 2020, and the fine is automatic and not dependent on the tax due (even if no tax is due). The penalty gets worse the longer you wait (3 months late and a £10 a day fine starts to accrue).

Aren't those the late filing penalties, not late registration?

Providing the op registers now and ensures any tax owed is paid by 31 January 2021 I doubt there will be any penalties levied.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

Hi there, 
Just wanted to ask that yeah, reading that it looks like it's a bit of a grey area. 

"If you have a new source of income on which there is a tax liability, you should notify HMRC by 5 October following the end of the tax year in which the income arose."
"If HMRC is not notified in time ‘failure to notify’ penalties can apply. These are based on the tax due and unpaid at ‘due date’ – normally the 31 January following the end of the tax year. The size of these penalties depends on taxpayer behaviour."

So I assume that means if you're very honest and polite they would understand as you've never done it before? I won't have to pay any tax I'm pretty sure although I'll go through my bank statements and double check now. 

The important bit is this,

If HMRC is not notified in time ‘failure to notify’ penalties can apply. These are based on the tax due and unpaid at ‘due date’ – normally the 31 January following the end of the tax year. The size of these penalties depends on taxpayer behaviour.

Got you, so in theory I could register now, get my self assessment in by 31st January 2021 and I'd be perfectly okay? For the tax year 2019/20 of course. 

Dazed_and_C0nfused

If there was nothing to pay yes.

Otherwise just make sure it's filed and paid by 31 January.

dude7691

Dazed_and_C0nfused said:

If there was nothing to pay yes.

Otherwise just make sure it's filed and paid by 31 January.

That's great, thank you so much I'll definitely do that then, easier than just waiting till next year and then I have to explain why I "forgot" to register this year. 

Jeremy535897

Dazed_and_C0nfused said:

Jeremy535897 said:

There is a lot of different opinion on this, but I think that the practical answer is that at some point you cross a line and it is self employment. That line is now probably set at the £1,000 de minimis for self employment income (assuming no other self employment). Unfortunately I think this means you should have registered as self employed by 5 October 2020, and the fine is automatic and not dependent on the tax due (even if no tax is due). The penalty gets worse the longer you wait (3 months late and a £10 a day fine starts to accrue).

Aren't those the late filing penalties, not late registration?

Providing the op registers now and ensures any tax owed is paid by 31 January 2021 I doubt there will be any penalties levied.

https://taxaid.org.uk/guides/taxpayers/tax-returns/late-tax-returns

The penalty for failure to notify is technically £100. See https://www.gov.uk/register-for-self-assessment/self-employed for reference to the fact that "you could be fined". It may be that they won't impose it if there is no tax due, but they can do I believe.
My reference to the 3 months delay was incorrect, and those are late filing penalties. Apologies.