Since becoming a full-time blogger, it has been a bit of an education about tax and earnings as I am completely self-employed from the work that I do. I have only been registered as self-employed once in my life before, and it was alongside my full-time job. So I earned hardly anything and it was for less than a year. So my tax return for that was super straight forward and simple. But now, with the 31st January self-assessment tax return looming, I have been looking into it all in much more detail. I have submitted my return and the tax that I owe. But if you’re yet to do it; you’ve still got time!
Here is a quick run-down on all things blog and tax return related:
What Qualifies As Income From a Blog?
As simple of a question as it sounds, many people get confused about it. But obviously any direct payment that you get sent is taxable. So any money from sponsored posts, payment for social media ads, money from affiliate programs or advertising. All of that kind of thing needs to be taken into account. If you do reviews in exchange for a product, then that is classed as ‘goods in kind,’ and is taxable too. Or if you get something, review it, and then sell it on eBay, that money from the eBay sale needs to be taken into account when doing your return.
What Do You Do When You’re Registered As Self-Employed?
When you’re registered, you will get letters through the post about when you need to start doing your tax return. In the mean time, you need to get your receipts and invoices organised. It will make it much easier to do at the end of the year, if you keep weekly, or monthly, records of everything. Make copies if needed and file everything in a safe place. If you have any blogging relate expenses, then make sure that you keep copies of those receipts. I’ll go into it more, but those recipes are tax deductible, so can come off any tax that you owe.
When it comes to doing your tax return, you might want to get advice from an accountant friend or a professional the first time around, just to check that you’re getting everything right. You could even try something like cloud accounting which means running the return straight from your web browser. So no need to download any software at all. Just don’t enter any information if you are ‘guessing’ or aren’t 100% what the form needs.
What Kind Of Things Are Tax Deductible or Classed As a Business Expense?
Anything that is related to your blog, your work, that you have to front the cost of, can be classed as a business expense. PayPal fees, your domain name payment, and self-hosted website fees, for example. Travel to events that doesn’t get refunded can be claimed to a certain amount. I was asked as part of a client’s campaign to make a video of all of our family. They wanted us all sat on the sofa and talking. We wouldn’t have been able to do it ourselves as we didn’t have a tripod at the time and no family close by / people that we’d be comfortable enough to film us. So we bought one. That kind of thing is a business expense as it was something I had to pay upfront for, for something relating to my work.
You can claim a certain amount for things like your internet bill, heating bill etc but it is a small percentage. Best to check with HMRC the exact amount that you can claim for those, if you are based at home.
What If I Can’t Pay What I Owe On Time?
If you can’t make the 31st January deadline (thats the deadline when you fill in online), then you need to get in touch with HMRC. They will be able to advise you and set something up for a payment plan. There might be a late fee too. So best to speak to them as soon as possible.
On a side note, I called them up to pay by direct debit the other day. I had read online about being able to spread the payments. I had the money, but it was just a painful amount to pay all at once. So I just thought I could pay a certain amount per month for the heck of it, as it sounded less painful to do it that way. That is not so! It is frowned upon to do that, and can be to your detriment if you ask to do a payment plan on a later tax return but have already done one a few years previous. So I just paid it in full. The best advice would be to keep a separate bank account and just transfer the tax money into it. Out of sight and out of mind!
What a minefield being self-employed is?! My head is hurting a little now…But I hope it has helped give you a starting place as you get your tax return in for the deadline. If you have any more questions, then the good people at HMRC will be able to help I’m sure.