Taxation

[Lisa Moore]

Do you have to pay tax on the gross sale or only on the money received?

[Steve F]

2 hours ago, Yackers1 said:

Corporation tax (i.e. company) and personal tax (self-employment) are two separate taxes and should be treated accordingly - Sorry Steve F.

 

If you earn over £1,000 in other income, such as self-employment you have to declare it on a UK tax return. You should not offset income and expenses in this exercise. Gross Alamy income is your gross income and it is reduced by the commission, i.e. the direct cost. 

 

I don't understand what point you're getting at here. My company charges me out at circa £70 an hour (engineers are cheap lawyers). The amount the company receives for my services is irrelevant to what I personally get taxed on - I get taxed on my take home pay. Same with Alamy - the UK government would tax you on your take home pay (i.e. net after Alamy commission).

 

Say Alamy charged 99% commission - should you be taxed on what the headline Alamy gross amount is? Of course not. The gross amount (minus your proportion) is not what you get paid, it's what Alamy gets paid (and what Alamy gets taxed on).

 

Yes, self employment is different, but the OP has confirmed that her take home pay from Alamy is less than £1,000 per annum.

 

Long story short. She doesn't need to worry about tax.

Edited May 30, 2023 by Steve F

[Mr Standfast]

It's the income you receive that's taxable not the gross selling price. Local tax office rules apply, seek professional advice etc...

[Steve F]

Lisa,

Guessing you're in the UK from your portfolio.

https://www.gosimpletax.com/blog/when-hobby-become-a-business-for-tax/

https://www.theaccountancy.co.uk/tax/do-i-need-to-pay-tax-on-my-hobby-side-business-13671.html#:~:text=In very general terms%2C your,known as the Trading Allowance.

 

(not professional advice)

[spacecadet]

If you haven't registered as self-employed, and that guidance says you need to, do it now.

When you do, HMRC send out regular emails about tax tutorials. I can't speak to them as they're quite basic, but you might have a look in.

If Alamy is your only income from photography you're unlikely to exceed the £1000 turnover mentioned. It used to, but even with 10,000 images my Alamy income no longer does by itself.

 

Edited May 30, 2023 by spacecadet

[Lisa Moore]

I exceed the £1000 turnover if gross sales are taken but not if only money received. So does the taxman look at gross or net sales?

[Steve F]

6 minutes ago, Lisa Moore said:

I exceed the £1000 turnover if gross sales are taken but not if only money received. So does the taxman look at gross or net sales?

 

It's absolutely not gross as Mr Standfast mentions above. Just net.

 

Just think, as a UK earner, you earn a certain amount for your company. Company takes overheads, profits etc. from this figure. Your salary is the 'net' that is left and this is what you get taxed on. Same principle with Alamy.

Edited May 30, 2023 by Steve F

[Yackers1]

Corporation tax (i.e. company) and personal tax (self-employment) are two separate taxes and should be treated accordingly - Sorry Steve F.

 

If you earn over £1,000 in other income, such as self-employment you have to declare it on a UK tax return. You should not offset income and expenses in this exercise. Gross Alamy income is your gross income and it is reduced by the commission, i.e. the direct cost. 

 

Even if your gross income is less than £1,000 I would suggest registering as self employed. If you exceed the £1,000 other income then you're going to have to anyway. Besides, if you register as self-employed there are other expenses that you can claim against the income. If these expenses exceed your income, i.e. you generate a loss you may be able to off set the loss against any other income (such as salary) and claim some tax back. Even if you can't utilise the losses you can carry them forward and offset against any profit in future years.

 

It is worth remembering you can claim capital allowances on your (expensive) photography equipment so if you regularly buy a lot of gear this will work in your favour. Just note that if you trade in your old stuff you have to account for the sales proceeds (i.e. trade in allowance) as a taxable receipt. 

 

I think you should seek professional advice.

[geogphotos]

In the past I have brought this up for discussion ( and been given fairly short thrift!).

 

Not in relation to taxation as such but in terms of turnover. Whether we should actually count the gross as our income and then Alamy commission as a business expense. 

 

The received non-expert opinion seemed to be that I was wasting my time worrying about anything more than 'money in the bank'.

 

But's let's say there was an attractive bank loan or other offer available only for businesses over a certain turnover then it could be of relevance. 

Edited May 30, 2023 by geogphotos

[NYCat]

I'm in the USA so a totally different situation but I find the once-a-year fee I give to my tax accountant is more than worth it. I make it up in taxes saved.

 

Paulette

[Brian Yarvin]

1 hour ago, geogphotos said:

In the past I have brought this up for discussion ( and been given fairly short thrift!).

 

Not in relation to taxation as such but in terms of turnover. Whether we should actually count the gross as our income and then Alamy commission as a business expense. 

 

The received non-expert opinion seemed to be that I was wasting my time worrying about anything more than 'money in the bank'.

 

But's let's say there was an attractive bank loan or other offer available only for businesses over a certain turnover then it could be of relevance. 

 

Interesting point Ian! My sense is that a good accountant could make this work. Besides being a way to market the skills of creative photographers, stock photography has long been a source of expression for the great talents of the accounting field.

[Brian Yarvin]

... I forgot to mention the obvious. American contributors are supposed to receive a 1099 form to state how much money Alamy has paid out to us. In my case, it's always been exactly the sum transferred to me. Their commissions have never been part of it. 

[Betty LaRue]

1 hour ago, NYCat said:

I'm in the USA so a totally different situation but I find the once-a-year fee I give to my tax accountant is more than worth it. I make it up in taxes saved.

 

Paulette

I agree. I bundle up all papers, and with a cover letter listing all income and all expenses, take it to my Certified Public Accountant. Then for a few minutes, we briefly catch up with what’s been going on in our lives in the past year. He gets them finished for me in 24-48 hours & I have my checks from Kansas & IRS in my bank account within 1-2 weeks. Well worth his charge.

[geogphotos]

1 hour ago, Brian Yarvin said:

... I forgot to mention the obvious. American contributors are supposed to receive a 1099 form to state how much money Alamy has paid out to us. In my case, it's always been exactly the sum transferred to me. Their commissions have never been part of it. 

 

 

Thinking back to a time when we rented our house. The agent would send out a statement with the rent received, their fees/deductions, and how much we were being paid.

 

When anybody asked how much rent we received we always gave the gross amount paid by the tenants not the amount transferred into the bank account. 

 

Even with Alamy we ( for some reason) always take about our sales in gross figures.

Edited May 30, 2023 by geogphotos

[John Mitchell]

You only have to pay taxes on the money you've actually received during the year, at least that's the way it is here in Canada. I always prepare my own income tax forms. I don't find it that difficult (just tedious) really, and I have other self-employed income in addition to what I earn from stock photography.

Edited May 30, 2023 by John Mitchell

[geogphotos]

There are advantages to registering with HMRC for Income tax and also voluntarily for VAT. 

[spacecadet]

On 30/05/2023 at 17:13, geogphotos said:

When anybody asked how much rent we received we always gave the gross amount paid by the tenants not the amount transferred into the bank account. 

You wouldn't do this if you were liable to tax on the rental income, surely! You're only liable for the net amount.

Edited June 5, 2023 by spacecadet

[M.Chapman]

1 hour ago, geogphotos said:

There are advantages to registering with HMRC for Income tax and also voluntarily for VAT. 

 

Indeed, including eligibility to pay potentially quite low NI contributions in return for accruing extra years of contributions toward state pension benefits. The return on investment can beat pretty much anything else, especially for those with low Self Employed income.

 

Mark

[geogphotos]

4 hours ago, spacecadet said:

You wouldn't do this if you were liable to tax on the rental income, surely! You're only liable for the net amount.

 

Gross rent then deduct all the costs such as agents fees, 10% wear and tear, then pay tax on profit

 

This was over 15 years ago. 

Edited June 5, 2023 by geogphotos

[Cryptoprocta]

On 30/05/2023 at 17:13, geogphotos said:

 

 

Thinking back to a time when we rented our house. The agent would send out a statement with the rent received, their fees/deductions, and how much we were being paid.

 

When anybody asked how much rent we received we always gave the gross amount paid by the tenants not the amount transferred into the bank account. 

 

Even with Alamy we ( for some reason) always take about our sales in gross figures.

Hmmm, if I'd asked about how much rent you received, that would be what I wanted to know (e.g. if I was thinking of going into the renting business, or even if I was just curious.)

If I wanted to know how much the tenant paid, that's what I'd ask.

And I talk about my Alamy income as net, and have to try to remember to put in the gross sometimes, as some people seem more interested in that. I'm only interested in what's in my pocket.

But as we already knew, our minds work in different ways - vive la difference!

[spacecadet]

On 07/06/2023 at 23:29, Cryptoprocta said:

vive la difference!

Well since commissions can vary quite a bit (gold, silver, distro, affiliate, direct) at least quoting gross attempts to compare like with like.

Edited June 9, 2023 by spacecadet