Sitting home and making money couldn't get any easier as it has now. We have seen lots of success stories of people around us who are making so much money through social media that they have quit their jobs. It is a dream job for many as they can just peruse their hobby such as travel, wood work etc and make money by sharing their experiences.
By the sound of it, it seems that it’s just a hobby that is being pursued however; in reality the more you are getting noticed by the people around you the more chances are that your income will be scrutinized by the HMRC.
As I always say, when you have money coming in you will have to pay taxes. If you are doing some activity through which you are earning money and you are spending some money so that you are able to do that activity HMRC will consider it a business and you will be liable to pay taxes.
It is always a good idea to get in touch with an accountant in Croydon who can advise you on taxes in this area so you are not worried about getting a penalty from HMRC for not reporting your income.
How Do I Report My Income
You will have to report your income from social media such as YouTube on the self-assessment tax return.
If you have income of more than £1000 in a single tax year you will have to register for self-assessment tax return by 5 Oct and fill in the self- assessment tax return and file it by 31 Jan of the following year. See our blog here to understand the deadlines.
You can register for self-assessment as self-employed online by following the link here
How Much Tax Will I Be Paying?
How much tax you will be paying will depend on the income that you are earning.
When you are a social influencer such as a you tuber, it’s not always your main job.
For example, you might have a stable job on which you are paying taxes and you are just uploading videos. The extra money that you are making is more than £ 1000 per year.
In that case you although you might be paying your taxes at source, meaning your employer has deducted the tax and NI before paying you the salary. You are required to state your salary in your self-assessment tax return form as shown in your P60.
This would also mean that you might have utilized your tax free personal allowance which is currently £ 12 500 and is set to increase to £ 12 570.
You will be paying taxes according to the tax brackets in which your income falls. To learn more about the tax thresholds click here.
Can I Claim Any Expenses?
Yes, very confidently. If you are ready to declare all your income and pay taxes on it you can claim any expenses from HMRC as well. The problem is that the form is confusing and you need an access code before you can complete the form and submit it. Because it takes HMRC at least three days to send out an activation code by post, if you delay filing your return you could miss the deadline and incur a penalty. If you are liable to pay taxes on profits received outside a Pay-as-you-Earn scheme you are required to submit a Self Assessment Tax Returns form to HMRC.
Claiming expenses mean that you will be.