Tax question - Full time job and helping a mate.
Discussion
Right, I have a full time job where I pay tax PAYE.
Recently a friend asked me to set him up a Web site and said he is prepared to pay me £100 a month as a retainer for me to do odds and sods on the site for him.
I have no intension of setting up on my own and simply want to do this to help a mate, however, I realise that I should declare this to the tax man. How do I go about that?
Also, can I then deduce costs that I incur, such as buying software, hosting costs etc when working on his site? If so, how far can I go with this, such as deducting part of my mortgage cost, as I'll obviously be carrying out this work at home.
Any help would be greatly received.
Recently a friend asked me to set him up a Web site and said he is prepared to pay me £100 a month as a retainer for me to do odds and sods on the site for him.
I have no intension of setting up on my own and simply want to do this to help a mate, however, I realise that I should declare this to the tax man. How do I go about that?
Also, can I then deduce costs that I incur, such as buying software, hosting costs etc when working on his site? If so, how far can I go with this, such as deducting part of my mortgage cost, as I'll obviously be carrying out this work at home.
Any help would be greatly received.
slapmatt said:
Right, I have a full time job where I pay tax PAYE.
Recently a friend asked me to set him up a Web site and said he is prepared to pay me £100 a month as a retainer for me to do odds and sods on the site for him.
I have no intension of setting up on my own and simply want to do this to help a mate, however, I realise that I should declare this to the tax man. How do I go about that?
Also, can I then deduce costs that I incur, such as buying software, hosting costs etc when working on his site? If so, how far can I go with this, such as deducting part of my mortgage cost, as I'll obviously be carrying out this work at home.
Any help would be greatly received.
Recently a friend asked me to set him up a Web site and said he is prepared to pay me £100 a month as a retainer for me to do odds and sods on the site for him.
I have no intension of setting up on my own and simply want to do this to help a mate, however, I realise that I should declare this to the tax man. How do I go about that?
Also, can I then deduce costs that I incur, such as buying software, hosting costs etc when working on his site? If so, how far can I go with this, such as deducting part of my mortgage cost, as I'll obviously be carrying out this work at home.
Any help would be greatly received.
My dad set up a ltd company for this sort of thing. After costs, it never made a penny, but helped pay for a ROOM in the house, proportion of heating, lighting, council tax, some of the car bills, a new computer, printer and consumables, etc.
I guess the library was a good place to start. Books about starting your own business ?
Yes you should declare it.
Yes you should pay tax on it.
The best way to do this is to treat it as "Sole-Trading" or "Self Employed" income.
Notify the Revenue within three months of your first payment for the work done.
Apply to be exempted from Class 2 NI *Self Employed)if the net income will be below the Lower Earning Threshold (£5,200).
After 5 April 2008, prepare a simple Profit and Loss account showing the income less the expenses and allowances you can offset against it.
Complete a tax return for 2007/08.
If submitted before 30 September 2008, the Revenue will notify you of your 2007/08 Self Assessment tax liability - payable by 31 January 2009.
If completed and submitted after 30 September 2008, you will have to calculate the liability yourself - unless you submit the return on-line.
If your gross takings from this activity remain at no more than £12,000 per annum max, I would not recommend setting up a limited company for this activity.
Yes you should pay tax on it.
The best way to do this is to treat it as "Sole-Trading" or "Self Employed" income.
Notify the Revenue within three months of your first payment for the work done.
Apply to be exempted from Class 2 NI *Self Employed)if the net income will be below the Lower Earning Threshold (£5,200).
After 5 April 2008, prepare a simple Profit and Loss account showing the income less the expenses and allowances you can offset against it.
Complete a tax return for 2007/08.
If submitted before 30 September 2008, the Revenue will notify you of your 2007/08 Self Assessment tax liability - payable by 31 January 2009.
If completed and submitted after 30 September 2008, you will have to calculate the liability yourself - unless you submit the return on-line.
If your gross takings from this activity remain at no more than £12,000 per annum max, I would not recommend setting up a limited company for this activity.
Edited by Eric Mc on Friday 27th April 15:28
Are you already into high rate tax bracket? If so then would seriously question whether it was worthwhile fee, once Gordo has got his slice, for all the admin you will have to deal with, even on lower rate it might be questionable. Certainly not going to be worth paying an accountant to do your annual return for you so you have that joy to look forward to, then record keeping for 6 years and hoping you have got your figures straight and have the possibility of an IR inspection hanging over you. Might just be easier to get him to take you out for a curry once in a while or whatever. If however it is maybe something you can grow as a sideline and do for 5-6 different folk then that becomes a different matter.
Sorry if this is doom and gloom but I did my own returns for the first couple of years and it is a bit of a headache.
Sorry if this is doom and gloom but I did my own returns for the first couple of years and it is a bit of a headache.
Waits for Eric to say that him paying for a Curry would deemed as form of payment and hence a benefit in kind or some such liability would arise ... I am honestly sure Gordo has this one covered a well
Edited by touching cloth on Friday 27th April 15:59
Eric Mc said:
Donation? For what?
Money is money as far as the Revenue is concerned. He did a job. He got paid for it. End of argument.
Money is money as far as the Revenue is concerned. He did a job. He got paid for it. End of argument.
well, i leant my mate £50 last year when he was a bit hard up.
I gave it him effectivley, so he shouldnt pay tax on it, or declare it.
If i chose to give him £50 a month to help him out, surely the same applies.
Now, if he's hard up, but wants to say thankyou by, say mowing my lawn once a month for free, why should he suddenly pay tax on the gift?
Oh I am not saying accountants shouldn't do the return, christ mine does mine now without fail - I just mean on that amount, once Gordon had his bit then an accountant has say £200 for fairly simple return? Then there really won't be much left of the £1200 to justify the record keeping etc that will still have to be done. To go ahead you would probably want to try to do the return yourself to save what will be a reasonable percentage of the "turnover" and then that brings further downsides like "Did I do it right" etc.
touching cloth said:
Waits for Eric to say that him paying for a Curry would deemed as form of payment and hence a benefit in kind or some such liability would arise ... I am honestly sure Gordo has this one covered a well
You have to buy HMR&C a naan bread and an onion bhaji if you go this route...
Size Nine Elm said:
touching cloth said:
Waits for Eric to say that him paying for a Curry would deemed as form of payment and hence a benefit in kind or some such liability would arise ... I am honestly sure Gordo has this one covered a well
You have to buy HMR&C a naan bread and an onion bhaji if you go this route...
Bargain, by the time you offset the petrol to get there you could probably get that down to a chapatti and some Mango Chutney
Edited by touching cloth on Friday 27th April 16:07
For that level of income, I wouldn't get too bogged down on trying to offset too much.
If you use part of your home as an office (even the kitchen table), a charge for use of home as office is allowable. Just add together all your domestic bills (gas, electricty, council tax and water charges) and divide them ny the number of habitable rooms in the house.
As the busines is on such a small scale, I would further rduce the claim based on the fact that the time spendt administering your self-employed activity isn't going to be very great.
If you use part of your home as an office (even the kitchen table), a charge for use of home as office is allowable. Just add together all your domestic bills (gas, electricty, council tax and water charges) and divide them ny the number of habitable rooms in the house.
As the busines is on such a small scale, I would further rduce the claim based on the fact that the time spendt administering your self-employed activity isn't going to be very great.
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