I‘ve put off this blog post for a while as talking about self employment, taxes & HMRC is pretty daunting, but it’s really important. Especially as we are coming to the end of the year and the deadline for filing your tax return.
I’m not any form of accountant or adviser but I have been self employed for almost five years. Four years of that I was solely running my business as a cake decorator with minimal income through blogging, but the past 12 months have really seen my blog grow, so much so that it is now my full time job and my sister manages the cake business.
WHY DO I HAVE TO REGISTER AS SELF-EMPLOYED?
If you are earning any money from your blog then you have to register as self employed blogger, even if it’s just a few quid a month you still have to do it. When you are earning a very minimal amount you won’t be paying tax anyway so there’s no reason to put it off.
I know some people who have set up as a Limited Company but for me there’s no need to do that just yet, it’s something I may consider in the future when my earnings are higher, or if I branch out into different revenue streams but at the moment being self-employed suits.
HOW DO I REGISTER AS SELF-EMPLOYED?
Now this is the easy part. You simply go onto the HMRC website to register for self assesment, it’s super easy, you just follow the on screen instructions which talk you through each step. You’ll then receive your Unique Taxpayer Reference (UTR) within ten days, with confirmation you have been set up for self assessment. A few days later you’ll get your log in details. Make sure you save your UTR somewhere safe as you WILL need it. I’ve even needed to send it to some companies I work with on sponsored posts/collaborative content.
HOW DO YOU DECLARE YOUR INCOME & WHAT ARE THE DEADLINES?
Depending on when you started earning you may be asked to complete your tax return.
The financial year runs from April to April ending on the 5th, so by the January 31st deadline 2017 I’ll be filing my tax return for April 15-April 16, then next January I’ll be filing 2016-2017.
To declare your income you need to fill out a Self Assessment Tax Return, you can do it via a paper or online form. Online is so much easier and you’ll need your log in details as mentioned above. This is where you’ll need all the evidence of your income & expenses. Make sure you keep track of everything each month and save ALL of your reciepts.
I do my income & expenses on a monthly basis as I learnt my lesson the hard way. The first year as self employed I left everything to the last minute and had to take days putting all the info into spreadsheets to work out my income & expenses, it took so long.
If you keep track of everything it’s actually really simple to fill in the forms, you simply add up your earning and detract any expenses and the final number is what you give to HMRC.
DO I HAVE TO PAY TAXES AS A BLOGGER & HOW MUCH WILL IT BE?
The personal threshold for tax is £11,000, if you earn less than that as a blogger then no you won’t pay any tax. From £11,001 to £43,000 you’ll pay 20%. So if you have a job alongside your blogging income then you may have more tax to pay if your income from blogging takes you over the threshold.
When you complete your tax return HMRC will tell you the amount you need to pay, if any.
You’ll also have to think about your National Insurance contributions too. If you earn under £5,965 per year then you can apply for an exemption. I did this for my first year due to start up costs putting me in negative earnings. If your profits are over £5,965 then you’ll pay Class 2 or if you’re over £8,060 you’ll pay Class 4. You can find more information on the rates on the HMRC site.
WHAT CAN YOU CLASS AS A BUSINESS EXPENSE?
This is where things do get a little more complicated as there are different types of expenses, you may want to think about talking to a tax accountant who will be able to give more in depth advice, but put simply a business expense is a cost to run your business.
For example certain equpitment can be classes as a capital expense such as a laptop & camera, then other items classified as a running expense. Stationery, your web domain, web hosting costs, a proportion of your utility bills if you work from home etc.
You could also give HMRC a call if you need any help, blogging is a new business so the lines can be blurred when it comes to what is accepted.
Well, that turned into a mammoth blog post. I wrote much more than I intended to but it is a big subject. I’ve touched on the key areas but could probably write another post just on each section! I hope this is helpful and feel free to ask any questions in the comments below & I’ll do my best to answer them for you.
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