Does your blog, vlog or YouTube content earn you a bit extra on the side? Just remember that the Tax Office could be one of your followers and might want you to declare on a tax return.
It’s great that your internet success and popularity is growing. But as part of your online safety awareness, you must take into account that it’s not just the ‘haters’ that can spoil your fun. Everything is visible for everyone to see – including the Tax Office.
It’s good to know that what you think you should declare as income and what HMRC thinks are often very different. We have a clear view of both perspectives and operate as an interpreter between the two.
Tax and online income
There is nothing wrong with earning a bit on the side, but just because it’s not your ‘proper job’ doesn’t mean that it’s exempt from tax laws. It is your responsibility to inform the Tax Office that you have additional income, through the Self-Assessment Tax Return process and there are substantial financial penalties if you are caught out. If you supply content of any kind (music, videos, writing, photos etc.) or products, for which you receive money in any way, this is regarded as an income stream and should be declared on a tax return. Whether it is taxable, or not, depends on a combination of other factors particular to your financial situation.
Are the consequences really that bad?
Some people work on the ‘I’ll just keep going until they catch me’ philosophy of dealing with the Tax Office. But this is a very high risk gamble when you consider that consequences range from hefty fines, to criminal charges for tax evasion (which include potential jail time). As the evidence HMRC needs to support their case is sitting right there on your page, the prospect of winning your case is considerably reduced.
HMRC would consider the following unacceptable reasons for failing to pay the correct amount of tax: ‘I didn’t know’, ‘I only do it for fun’, ‘I didn’t think you were watching me’, ‘I didn’t think you would catch me’ and ‘But I pay tax on my real job’.
Tax isn’t actually all bad
Work expenses and allowances are the other, shinier side of the self-assessment tax return coin. Tax regulations state that you are entitled to reclaim the tax you have paid on an assortment of work related expenses. Getting your money back from HMRC is all part of the process.
So much potential…
There are frequent stories about people – and animals – earning a fortune through things like a YouTube channel, crowdfunding projects through companies like Kickstarter and Patreon, or building a mass Instagram following. As our devices incorporate more and more astonishing technology, everyone’s capacity for producing online content grows. They even included a live streamed flash mob task on the ‘The Apprentice’ (with variable results!).
It’s all a matter of perspective
To you – You get a percentage of the revenue from a couple of ads that are placed around your videos, or as part of an affiliate agreement (like Amazon or ebay). Perhaps your crowdfunding patrons only just pay for the materials to produce your next product, there’s no actual profit.
To HMRC – You need to declare all of this as further ‘taxable income’. If your ‘day job’ income already takes you over your Personal Allowance limit and you pay tax on that salary, then your ‘side’ money is also taxable.
I’ve never filled in a tax return before
Well, you might not actually need to fill one in now! Let us cast our eyes over your entire financial situation – including your online activities – and work out what you need to do next. We speak fluent ‘tax regulations’, can quickly assess which ones apply to you and calculate if you need to declare extra income to HMRC.
The law is running to keep up with the pace of technological advancements, we keep fully abreast of all changes as they are issued and will keep you informed of exactly how that affects your personal situation. That way, you don’t ever become a horrible ‘tax avoidance prosecutions’ statistic.
