Hi there, Im 17 and i live in the UK (south of england). Basically, i left school last year, and ive done a years course at college in I.T. I now want to go onto setup a few good web startups and also be a freelancer in my spare time. Do i have to pay tax on my earnings? I will be getting paid through PayPal.
Of course you have to pay tax. Well, not necessarily. You'll have to claim it, but, depending on the total amount, you may not. I'm not sure what that amount is. If you are not quite sure what all you need to do when setting up a business you should consult an attorney to help you out. There are a lot of things you need to be aware of. Things like offering money back guarantees for international sales (outside the UK), VAT, etc. I'm not from the UK so I don't know all the specifics, these are just things I have seen others talk about having to do on various forums. Your best bet would be to invest a little money in a good attorney. Your going to have to register your business as well as some other things.
Do you know a chartered accountant (maybe one of your parents' friends) that will give you some free advice? Yes, you will pay tax if you earn more than the minimum per the tax tables. You should be able to deduct a lot of related expenses like internet costs, software, hardware, licences etc. Have a look on the hmrc gov site for the tax rate and how much you have to earn before you will start paying tax.
i work for a chartered accountantss ! but sorry have no idea lol i wouldnt if i was you. your 17 and earning some on the side money! dont tell anyone about it lol. regrds, B. Ps @ 17 you are aloud to earn at least around £7k before paying tax.
In the United States I believe its up to $600/year until you have to start reporting income. Who in their right mind would do that...
Not until you turn 18 you won't have to start paying tax in the UK, which is about £35-40 a month, only if you're working though, if you cant find a job i guess theres always jobseekers allowance which covers it and if you tell them your in college i think it's alot less. Doing your freelance work online wont effect you in anyway, ive been doing it since i was 15 and not a problem. Now i'm 18 and have to pay £35 / month (only if employed and not on benefits) As you know its a fuckin pain in the ass to find a job here in london at the mo lol
Really, only £35 a month? I thourght they took like a % of what you earn, and it goes up if you earn over a certain amount etc? lol. Yeh and sweet, i wont be turning over £7k before the end of the year. I want to earn at least £2,500 before the end of july, then just have fun with my car in the summer with mates and stuff.
Andy92, unless you reach 7-8k in profits you are not liable to pay tax, so the answer is not unless you earn between 7-8k!
That's a really helpful reply; thanks a lot! I guess I might have fallen into the same category as well.
One thing to keep in mind, if you register yourself as a business you will be able to deduct certain expenses. I'm not sure how UK law works. But, you can deduct a portion of the internet connection in your hosue/apartment. A portion of the rent/mortgage, utilities, if you purchase a new computer, really anything. You have to think with that mindset But with those you can only use a portion of what you can justify as using it for the business. Like my computer that I purchased not too long ago, I use it 75% business related. I count forum posts as business time I am advertising my business correct? . I play about 25% of the time on a game of some sort lol. A portion of my mortgage, I have an office, I count the floor space of the office compared to the ohuse, about 1/7th, as a deduction as well as the office we have leased in the city, same with the utilities, etc. The internet connection I count about 45% as a deduction. You have to get creative. If you meet someone for lunch to talk business, you can deduct that. Gas when you drive to the store to pick up something related to your business. My truck payment I only use it for business related things. I use my car for personal things. Get creative and you can keep yourself well under that for a while lol.