Declaring extra income to HMRC

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Declaring extra income to HMRC-2

A lot of people have been asking me about whether they need to declare their extra income to HMRC, being worried about tax avoidance, and if so, what needs to be declared. Unless you're only selling your unwanted items on eBay, then you need to be declaring your extra income. This includes but is not limited to online surveys, sponsored blog posts, mystery shopping, smart phone app earnings and more. Even if you're working full time and paying tax through PAYE, you still must declare your extra income. The whole process of registering as self employed and then completing a self assessment each year only takes a few hours making declaring extra income to HMRC easy.

declaring extra income to HMRC

Of course, every blogger or eBayer doesn't have to register. If you're blogging but not getting any income from it, and if you're just selling your unwanted items on eBay, you won't need to register. But once you've accepted payment from your blog, or sold something on eBay that you specifically bought to sell, you're going to want to go ahead and register for self-assessment. You must have registered by 5th October after the end of the tax year you need to complete a tax return for. So that means if you've made some extra income between 6th April 2013 and 5 April 2014, you must register by 5 October 2014. You can register late, but you may face a penalty fine. You must then complete your self-assessment and pay any taxes owed by January 2015, so as you can see, you have plenty of time to get this all sorted, and know exactly how much you earned and how much you can offset.

How much are you going to have to pay out in National Insurance and tax? Here is a brilliant calculator that allows you to put in both your employed and self-employed earnings. So, for example, if you were earning £15,000 a year from your “proper” job, and £200 a month online (with no expenses), after tax and National Insurance you will actually be taking home £148.08 from that £200 extra you're making each month.

To register, simply go here to the HMRC website and register your business as self-employed – don't be scared by the use of the title “business”, you can apply as an individual earning some extra money. Be sure to read through carefully and answer all the questions. Once you've registered you will receive your Unique Taxpayer Reference, which you can use to register to complete your self-assessments online. Once received, go here to the HMRC self-assessment home page and on the right-hand side and select “sign up for self-assessment online” and follow the process.

The HMRC site is a bit of a minefield, unfortunately. But for starting out, be sure to check out their information page about Undeclared Income. If you do get stuck then they have a very helpful, free phone call center number, where someone is on hand to answer your questions. The number is 0300 200 3310.

HMRC can take the tax in two ways – you can either have your tax code from your main job changed, so that you're taxed through that, or you can opt to pay it yourself when the bill comes in. Personally, I prefer the second option, keeping the tax I owe away from my personal income.

Remember that you can offset most expenses that you have incurred, so for example, web hosting costs, or even petrol to boot sales where you've purchased items to sell on. I can strongly recommend using Google Drive/Google Docs to create a spreadsheet of all your income and outgoings related to earning extra income. This will help you to complete your self-assessment much more easily.

If you have any further questions then feel free to ask them in the comments. I'm no accountant, but if I can't help you then I'll try to steer you in the right direction.

declaring extra income to HMRC

15 Comments on “Declaring extra income to HMRC”

  1. Hi,
    Will it be ok for me to register for tax return now, if I have had extra income since August 2014?
    also will I have to be paying additional NI, if I am already employed and I pay NI through my employer?
    thank you

  2. I literally earn an extra £20/30 a year from online surveys, as I don’t have much spare time to do them… Do I still have to register and declare this as extra income?! Seems ridiculous for a tiny amount

  3. Great article. There are probably a fair few people falling under this. Given the large fines and also potentially prison for tax avoidance it is something not worth trying to avoid.
    I have a question, when off setting expenses how do you calculate how much to offset? Or do you just list your expenses and HMRC calculate it for you?

  4. Hi, sorry can I ask a silly question please! If you are unemployed and have a small income from savings only, if you start doing the surveys and make a small income from them do you have to do a self-assessment tax return? Just wondered as it seems a bit pedantic and unnecessary as no tax would be payable at all (well under the personal allowance)! Thanks

    1. You have to declare everything regardless of if you are under the personal allowance or not. Once you declare, they will either say you owe nothing or give you your bill. Honestly, don’t mess with HMRC. Always declare! x

    2. Hello. The money you earn is very little and hardly worth the ‘hassle’ is very much debatable. Lets make up a story. I am making extra money. My (Net) profit is £ 101.00 for the year. Its not a large figure for the year. Oh I did forget to tell you that the turnover for the year was £ 500,000.00 . Less my allowable expenses and the car penalty fine I earned £ 66.00 . Only if I include allowable expenses it is only then I made £ 101.00 for the year. As the car fine is not an allowable expenses I must show on tax return £ 101.00 is my profit. Since I did in this supposition pay a car penalty of £ 35.00 , the earning then was only £ 66.00 . Will HMRC say you only made a drop in the ocean, therefore not necessary to declare. The answer is No. You must declare all as your tax is turnover or income for the government. We must be and it is the key word ‘fair’ . If there is anything else unclear in your mind try me. More than happy to help.

      1. Completely agree. All income must be declared, regardless of how much is it or if you reach the tax threshold. x

  5. What about the value of the ‘free’ items you get to purchase while Mystery Shopping. Is tax payable on this?

  6. Hi,

    If I am selling on ebay and declaring income to HMRC do I need to set up an ebay business account or can I carry on selling on a personal account?

    1. It depends. Are you selling as a business? Then yes you do. If you’re just selling your own items from home then you don’t.

  7. Hi Emma, I hope you can help. Google and .Gov is just a minefield.

    Since November 2017 I have submitted 4 invoices to a small media agency that I am doing some freelance work for. All 4 invoices total approx 4,000£.

    I only do 3 or 4 jobs a year for them, so its not worth setting up a company is it?

    I also need to pay what I owe in tax. Can I just declare it as extra income?

    Also because I am a bit late will I get fined?

    Why is it made to be so stressful!!?

    1. Hi Brian, I’m no tax expert so won’t be able to advise you. I suggest you get in touch with HMRC

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