Oh man even the thought of writing this blog post gives me a bit of a headache, let alone actually finding out all of the facts and figures that go along with it. But the thing is, taxes (and stuff) are important, whether we like it or not. So, here's a sporadic blog post all about it - damn I hope it makes sense.
Now obviously I'm not any form of accountant - or even any form of clued up person when it comes to the business side of blogging - but I've done some research and I've gone through it all myself, so I like to think I know a thing or two when it comes to dealing with the British tax man. It's not as tricky as it all sounds, honestly, it's just a lot of really annoying (but easy!) things you have to do in order to stay, well, legal. Because let's face it, no one likes getting a big bill at the end of the year, do they? Cheques, maybe. Bills..not so much. But anyway, let's get to it!
When should you register as self-employed?
If you're even thinking about earning any money from your blog, it's best to register yourself as self-employed just incase you do start earning a pretty penny. And by pretty penny, I literally do mean a penny. No matter how much you're earning - whether you live off it or buy a coffee from it - you have to register yourself as a limited company, which basically means you're both the owner and an employee of your blog. To do this, all you need to do is set up a PAYE (Pay As You Earn) system to pay yourself with the earnings from your blog.
What comes under blogger earnings?
Blogger earnings can be anything from actual monetary gain (from sponsored posts, affiliate earnings, advertising etc.) to even the products you get given as a form of payment (for example, if you get given a pair of shoes to post an article about shoes on your blog). You should also declare any money you receive from selling samples that you've been given. So if you receive a dress as a PR sample and decide to sell it on eBay six months later, you'll need to declare the amount of money you've sold it for.
Is there a time limit to register as self-employed?
There's no specific time to register yourself as self-employed, but you need to do this ASAP once you start earning - even if you only earn a few pennies. You do however have to make sure you complete you Self Assessment tax return and pay your tax bill on time, else the tax man will come a-knockin.
What should you do once you're registered?
Once you're officially self-employed, the next step will be to fill out a self-assessment tax form, which basically documents the earnings and spendings that come with your blog. The self-assessment tax form is actually really simple to fill out as long as you stay on top of your earnings and expenses throughout year, so be sure to note down any income and keep hold of your receipts to act as proof for anything you want to claim back on. You may also have to pay towards your Class 2 National Insurance Contributions and VAT (but hey, scroll down for more info on that).
Do you have to pay taxes as a blogger/internet person?
The Standard Personal tax Allowance is £10,600 which is the amount of money you're allowed to earn without having to pay to pay tax on it. If you're earning less than that, you shouldn't have to pay tax (although you do need to combine your blog earnings with any other job you have), but if you're earning more then you'll have to pay 20% back on whatever you're earning on top of the standard rate.
When it comes to paying your Class 2 National Insurance Contributions it all, again, depends on how much you earn. If you're only earning a bit of pocket money every once in a while (less than 5,965 a year, to be precise) you may be able to get a Small Earnings Exception which means you won't have to pay any National Insurance. If you're over that threshold however, you'll have to arrange your NI payments yourself, either through direct debit or by paying the amount in the payment request/invoice that the HMRC will send you.
For most bloggers, this won't apply, but if your turnover is more than £82,000 a year you may have to pay VAT. Like I said, this probably won't be an issue for a lot of you guys, but just incase it is you can always register for VAT here.
How do you register for self assessment?
If you've already registered yourself as self-employed you'll already be registered with Self Assessment and National Insurance Contributions. You should receive two letters within ten working days - the first will include your Unique Taxpayer Reference and it'll confirm that you have a Self Assessment record set up as well. You'll need to keep hold of this letter since it includes your UTR, so stash it away in a file for a later date. The second letter will include an activation code that will allow you to get online. You need to use that within 28 days otherwise you'll have to go through the entire thing again. Which we don't want to do, cause it's kinda boring, right? Right.
How do you declare your income and what are the deadlines?
To declare your income all you need to do is fill out a Self Assessment Tax Return by the end of every tax year (which is the 5th April). You can do this either by going online or filling out a physical form, which you can send off by post - although I found it easier (and a lot quicker) to do it on the website. This is the time that you'll need to get hold of all your bank statements and receipts so that you can add up your blogs earnings over the past year. All you need to do is add up what you've earned, and essentially subtract any business expenses that could be exempt from tax. To put it short, you add up the earnings, and minus the expenses. The number you end up with is the number you give to the HMRC.
What can you class as business expenses?
Business expenses are typically anything that aids your business (or in this instance, your blog) that you have to initially have to pay for. This could be anything from equipment such as laptops and cameras, to travel tickets. Since blogging is still a pretty new business venture, the lines of what is and what isn't an expense can be pretty blurred, so if you're uncertain at all it's best calling the HMRC directly for more information. Same goes with just about anything in this blog post!
Oh my lord, I can't actually believe we survived this blog post - and by we, I mean me. My fingers hurt, everything hurts. But hey, hopefully you guys found at least some of this useful - and if not, don't forget you can always contact the HMRC with any questions! Those folks know a lot more than little old me..
Did this help you guys out at all? Let me know!