Do you run a small business alongside a job? #taxguide #mumpreneurs #secondincome

Kellie KnightDo you earn extra money alongside your regular job? Did you know that this income is most likely a taxable income, and should be declared on a Self Assessment Tax Return?

What counts as a second income?

A second income could come from:

  • consultancy fees, eg for providing training
  • organising parties and events
  • providing services like taxi driving, hairdressing or fitness training
  • making and selling craft items
  • buying and selling goods, eg at market stalls or car boot sales

It is quite common for people to believe that they have a ‘hobby’, when in actual fact they are trading, and should be declaring that income to HMRC.  Obviously, this income could then effect your entitlement to tax credits and other benefits.

If you are party organiser for an organisation, and are earning a commission based upon your sales, this income would count as self-employed income, no matter how low it may be.

If you are on occasion buying and selling items at a car boot sale, then this could be classed as a hobby. Whereas, if you did this every weekend, then it would be deemed to be a taxable income. The key fact is how frequently you participate in the transactions, rather than the values involved.

moneyIf you have a second income it is advisable to ask an accountant or HMRC if they would deem it to be a taxable income, as soon as possible.

HMRC have a ‘Second Incomes Campaign’ which  gives you the chance to bring your tax affairs up to date if you’re employed and have additional income that’s not taxed.

Can I do this?

You can take this opportunity if:

  • you’re an employee
  • you’re resident in the UK
  • you have additional income from working for yourself

How to get the best terms:

You need to tell HM Revenue and Customs if your additional income hasn’t been taxed through either:

  • your main job
  • another Pay As You Earn (PAYE) scheme
  • Self Assessment

This is called a ‘voluntary disclosure’. To get the best possible terms you need to tell HMRC that you want to take part in the campaign.

You’ll have 4 months to calculate and pay what you owe.

If you have a question, or if you would like any further advice in this area, why not contact Knight Accountants and one of our qualified, experienced team will be more than happy to assist you.
We are an award winning family run firm, specialising in small business and service charge accounts.  We are based in Hastings, East Sussex offering affordable fixed fees to all.
If you are happy with us, why not recommend us to a friend? For all converted referrals we give a £25 donation to a charity of your choice.

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