'Side hustles' & Tax

TobyToby246

Hi everyone,

I work a full-time job but I try to make some extra income through selling items, such as small antiques, online.

I will have made over £1,000 by the end of the tax year, so will have to inform the tax man. In the future, if I make a healthy amount, I will get an accountant, but for the time being I am keeping track of income, allowable expenses, and profit, in a spreadsheet.

I have a question about allowable expenses and thought a fictitious example would help. Here's the question: If I sold an item on eBay for £135 + £15 postage, the buyer would pay me £150. Therefore my income would be £150 for this item. Does this mean that I should:

1.  record my income for this item as £150 and list £15 as an allowable expense for postage, or
2.  record my income for this item as £135 and list £15 as an allowable expense for postage, or
3.  Do I list the income as £150 and not record postage as an allowable expense at all, because the buyer paid me for it?
4. some other scenario?

I hope this makes sense. I am rather new to this but want to ensure that I am keeping track of expenses accurately. I realise this is a simplistic example but I hope it makes sense. 

Many thanks for your help,
T

fimacdoodle

3.  Keep honest records - otherwise there is not point!!
But did you not use tape and boxes to send it - and drive your car to the Post office - now that's an expense.....

Taxman has just warned the ebays and Ubers gig economy style companies that they will have to supply records soon. So many will be caught out.......

TobyToby246

That's helpful, thank you. I, of course, do not want to cheat the tax man, I just want to make sure that I am doing the right thing!

Thanks again,
T

steven333

Congrats on the money made from the side hustle!

kimwp

If it's like renting a room, then I think you can choose what method* to use for calculating the tax and one method might be more advantageous than the other. Meticulous record keeping will allow you to assess which is better for you.

*Tax all income in exceedance of the threshold Vs calculate profit.

DullGreyGuy

TobyToby246 said:

Hi everyone,

I work a full-time job but I try to make some extra income through selling items, such as small antiques, online.

I will have made over £1,000 by the end of the tax year, so will have to inform the tax man. In the future, if I make a healthy amount, I will get an accountant, but for the time being I am keeping track of income, allowable expenses, and profit, in a spreadsheet.

I have a question about allowable expenses and thought a fictitious example would help. Here's the question: If I sold an item on eBay for £135 + £15 postage, the buyer would pay me £150. Therefore my income would be £150 for this item. Does this mean that I should:

1.  record my income for this item as £150 and list £15 as an allowable expense for postage, or
2.  record my income for this item as £135 and list £15 as an allowable expense for postage, or
3.  Do I list the income as £150 and not record postage as an allowable expense at all, because the buyer paid me for it?
4. some other scenario?

I hope this makes sense. I am rather new to this but want to ensure that I am keeping track of expenses accurately. I realise this is a simplistic example but I hope it makes sense. 

Many thanks for your help,
T

Your revenue is £150, your expense is whatever you actually pay for P&P not what the amount you charged the customer.

You also have another choice which is to allow the basic £1,000 of expenses rather than having to work out the actual expenses though clearly you'll want to work out the actual so you can see if its more or less than £1k. 

Also need to decide if you are doing cash or accrual accounting. Most self employed do the former as its easier but were you to do the later then its 150 less actual P&P less how much you paid for the item would be the gross profit