Self Assessment

[daveo]

I'm not very active on Alamy anymore but am still getting requests for self-assessment tax returns purely based on the fairly small income I'm getting on Alamy sales. (All other incomes is PAYE)

Is there a lower limit on how much you can earn via Alamy and not have to do a self-assessment tax return?

 

Seems a bit a waste of everyone's time to be doing one based on £~80 sales in a year. But is that what has to happen in everyone's experience?

[Guest]

IIRC, you may (as with all tax it's a big may) need to fill out a SA form if your income is more than £2500 from an untaxed source. That doesn't mean you don't have to fill out the form, always ask HMRC.

 

There is a tipping point when it is worth doing since you can claim expenses related to the 'business' but there's also a point where the tax man is not going to allow you to effectively subsidize a hobby from your PAYE tax returns (i.e. your claim gives you a refund).

 

Just contact HMRC and get them to sort it out i.e. yes or no based on your non-taxed income....and get it in writing as well!

[spacecadet]

If you've not had much income for a couple of years, and aren't likely to, tell them and they'll stop. You can then just tell them about any additional income and they'll put it on your tax code.

As to waste of time, my online return takes me about 15 minutes because I already have the figures on a spreadsheet. So it's hardly worth turning it off for the bother of having to register again.

[Robert M Estall]

You surprise  me that your collection is only bringing in less than a hundred pounds per year. There are some very nice images there. The infra-red perhaps a bit off-piste  but Simon Marsden did OK in that area. If the self assessment is too much hassle I'm sure you can get out of it, on the other hand you may find yourself doing some freelance in another area one day. Or take a few more snaps! You obviously know how........

[daveo]

Thanks all.

Yes I suppose it's not that much hassle and I (very) occasionally have a good enough sale to make it seem like a worthwhile endeavour ($2000 being my record by quite a distance)

Robert I definitely feel that quantity has a pretty big part to play as well as quality so my small collection is a fairly major reason why sales are few and far between... and true enough, I have never sold an infrared shot!

[Paulstw]

Rememeber the NI contributions bill too. I have just been stung for £194. Yip selling images is great......

[Robert M Estall]

NI contributions class 4 were a pain, but stop at age 65. No free TV licence yet and may not be available by the time I get there.

[Guest]

There are lower limits on NI, if they are an issue for additional income.

 

Last year's figures.

 

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2014-15/tax-and-tax-credit-rates-and-thresholds-for-2014-15

[Robert M Estall]

I could never quite get my head 'round the thinking governing the class 4 thresholds but I do recall it really hurt! Basically, if you are just scraping by, the tax isn't going to be much if anything, but when you get going well, you are going to be paying an extra 9%  on quite a big chunk of your income over and above income tax.

 

On the other hand, no tax paid, bust country I guess.

 

but I digress........

[dov makabaw]

I am sure that with such low income you can find legitimate business expenses to set off in order to show a loss. If the loss is not OTT it will be deductible from your other income and will reduce your overall tax liability. In this way HMRC will be subsidising your new venture! Can't be bad can it.

 

 

dov

[Jansos]

The dreaded deadline for UK HMRC Self Assessment looms larger and I find myself in the same pickle that I did about this time last year. My first year on Alamy yielded zero revenue as I did not receive payment until the following tax year but HMRC would not let go and I still had to complete a Self Evaluation (complete nightmare for the uninitiated). The online Self Evaluation took an age to do and then I got clobbered with approx £200 of fees even though I had made a loss!

If and when my returns from Alamy ever get to a state where I can afford to employ an accountant I will do so but for now it just doesn't make any economic sense to do so (they appear to charge about £400-500 pounds to file an assessment on your behalf). So my question is....... does anyone have any good tips about what to do and what not to do or where to get understandable advice from? The HMRC 'helpful' explanations require a degree in metaphysics to decipher. Any help much appreciated. :-)

[Martyn]

Found the whole on line system to be a complete nightmare so insisted on doing the paper return instead....which is not much use to you now as the deadline for the paper return has passed ! I picked up the 'phone and a very nice HMRC person took me through the paper ....as I had forgotten bits from last time ! They did say, however, that if I want to do it on line next time, the same sort of 'phone assistance is available....

[Jansos]

Found the whole on line system to be a complete nightmare so insisted on doing the paper return instead....which is not much use to you now as the deadline for the paper return has passed ! I picked up the 'phone and a very nice HMRC person took me through the paper ....as I had forgotten bits from last time ! They did say, however, that if I want to do it on line next time, the same sort of 'phone assistance is available....

That's good to know. Thanks for the advice, I'll give them a call. :-)

[MDM]

I'm no tax expert but the UK government have introduced what they call the cash basic a few years ago which essentially means you only report actual payments that occurred within a given tax year rather than the date of the invoice (date of sale on Alamy). Traditional accounting takes the date of the invoice so you could have to pay tax where you haven't actually received the payment. This does really simplify things I think. If your only income is from Alamy, then only reporting income actually received will make things simpler for you.

 

https://www.gov.uk/simpler-income-tax-cash-basis/overview

 

If you are registered for self assessment online, then you can ask questions through the online facility which is generally better than using the phone (cutbacks in public services have made it far more difficult to get through although I think they have improved again in the last year). You also have a record of what was said.

[Jansos]

I'm no tax expert but the UK government have introduced what they call the cash basic a few years ago which essentially means you only report actual payments that occurred within a given tax year rather than the date of the invoice (date of sale on Alamy). Traditional accounting takes the date of the invoice so you could have to pay tax where you haven't actually received the payment. This does really simplify things I think. If your only income is from Alamy, then only reporting income actually received will make things simpler for you.

 

https://www.gov.uk/simpler-income-tax-cash-basis/overview

 

If you are registered for self assessment online, then you can ask questions through the online facility which is generally better than using the phone (cutbacks in public services have made it far more difficult to get through although I think they have improved again in the last year). You also have a record of what was said.

Cheers MDM - very helpful. Have just completed (but not submitted) my Online Self Assessment. Thankfully HMRC are asking for much less this year but I will go back and check-up on 'Cash Basis' side of things as soon as I have recovered from my online efforts. Thanks for the suggestion. BW, John

[spacecadet]

The dreaded deadline for UK HMRC Self Assessment looms larger and I find myself in the same pickle that I did about this time last year. My first year on Alamy yielded zero revenue as I did not receive payment until the following tax year but HMRC would not let go and I still had to complete a Self Evaluation (complete nightmare for the uninitiated). The online Self Evaluation took an age to do and then I got clobbered with approx £200 of fees even though I had made a loss!

If and when my returns from Alamy ever get to a state where I can afford to employ an accountant I will do so but for now it just doesn't make any economic sense to do so (they appear to charge about £400-500 pounds to file an assessment on your behalf). So my question is....... does anyone have any good tips about what to do and what not to do or where to get understandable advice from? The HMRC 'helpful' explanations require a degree in metaphysics to decipher. Any help much appreciated. :-)

There are no fees from HMRC- did you file late and incur a penalty?

There's plenty of self-employment advice about. Once you get the hang of it and keep accounts as you go along online self-assessment takes about 15 minutes.

[Bryan]

So my question is....... does anyone have any good tips about what to do and what not to do or where to get understandable advice from? The HMRC 'helpful' explanations require a degree in metaphysics to decipher. Any help much appreciated. :-)

When I first started selling photos I registered as a small trader and then attended a couple of free seminars run by HMRC for people starting up in business. I found them very useful, they explained the need to keep detailed accounts and covered what you could claim against tax etc. Don't know if they are still available, but worth pursuing if possible.

 

I have other business interests, but find the self assessment reasonably straightforward. I generally do mine around November time, when you should have all the required information to hand. Not sure how much you would need to earn before it becomes worthwhile to employ an accountant.

 

Thinking about this, I need to buy some kit to defray against some of my inconsiderable photo earnings for this tax year.....

[M.Chapman]

I'm registered as a sole trader and do an on-line HMRC tax return. I now find it quite straightforward.

 

The benefit of doing it on-line is it calculates the tax owed BEFORE you have to submit it, so you can make corrections if needed. I find this really valuable as it can reveal areas where I've made an error which I can then correct before recalculating and submitting.

 

If you've regularly used the paper self-assessment form before, it's easy to migrate to on line. But if you haven't then it will be quite daunting as there are so many questions which you need to read carefully and understand before (probably) discovering most of them don't apply and their boxes should be left empty. The online form is better in this respect as after a few up front questions it leaves whole sections out if they're not needed.

 

PS. I strongly recommend using "cash basis" accounting for your sole trader account - it simplifies things a lot.

[Jansos]

 

So my question is....... does anyone have any good tips about what to do and what not to do or where to get understandable advice from? The HMRC 'helpful' explanations require a degree in metaphysics to decipher. Any help much appreciated. :-)

When I first started selling photos I registered as a small trader and then attended a couple of free seminars run by HMRC for people starting up in business. I found them very useful, they explained the need to keep detailed accounts and covered what you could claim against tax etc. Don't know if they are still available, but worth pursuing if possible.

 

I have other business interests, but find the self assessment reasonably straightforward. I generally do mine around November time, when you should have all the required information to hand. Not sure how much you would need to earn before it becomes worthwhile to employ an accountant.

 

Thinking about this, I need to buy some kit to defray against some of my inconsiderable photo earnings for this tax year.....

 

Cheers Bryan, I'll look out for those seminars. They sound useful. Having been PAYE for most of my adult life this is a whole new game to me. BW, John

[Jansos]

I'm registered as a sole trader and do an on-line HMRC tax return. I now find it quite straightforward.

 

The benefit of doing it on-line is it calculates the tax owed BEFORE you have to submit it. I find this really valuable as it can reveal areas where I've made an error which I can then correct before recalculating and submitting.

 

If you've regularly used the paper self-assessment form before, it's easy to migrate to on line. But if you haven't then it will be quite daunting as there are so many questions which you need to read carefully and understand before (probably) discovering most of them don't apply and their boxes should be left empty. The online form is better in this respect as after a few up front questions it leaves whole sections out if they're not needed.

 

PS. I strongly recommend using "cash basis" accounting for your sole trader account - it simplifies things a lot.

Cheers M.Chapman, Cash basis will be the way to go from now on! Thanks for the tips. Agree that the online forms are quite straightforward but some of it is sheer gobbledygook! BW, John

[Jansos]

 

The dreaded deadline for UK HMRC Self Assessment looms larger and I find myself in the same pickle that I did about this time last year. My first year on Alamy yielded zero revenue as I did not receive payment until the following tax year but HMRC would not let go and I still had to complete a Self Evaluation (complete nightmare for the uninitiated). The online Self Evaluation took an age to do and then I got clobbered with approx £200 of fees even though I had made a loss!

If and when my returns from Alamy ever get to a state where I can afford to employ an accountant I will do so but for now it just doesn't make any economic sense to do so (they appear to charge about £400-500 pounds to file an assessment on your behalf). So my question is....... does anyone have any good tips about what to do and what not to do or where to get understandable advice from? The HMRC 'helpful' explanations require a degree in metaphysics to decipher. Any help much appreciated. :-)

There are no fees from HMRC- did you file late and incur a penalty?

There's plenty of self-employment advice about. Once you get the hang of it and keep accounts as you go along online self-assessment takes about 15 minutes.

 

Thx Spacecadet, 15" mins sounds great! Guess it gets easier with practice! It wasn't late and there weren't fees, it was pure unadulterated tax! Unfortunately, I think I completed some parts incorrectly and got clobbered as a consequence. Still cheaper than using an accountant though! Hope to claim it back this year.

[MDM]

If you made mistakes you can simply modify your previous return online and resubmit it and it will recalculate what you owe or are owed. In fact, if last year was your first year doing a self assessment return, then you could probably go back in and do is as cash basis - you are asked if you do this early under the self employment section. As I said, I'm no tax expert so it might be sensible to query HMRC if it is ok to do this retrospectively. If you had no income other than Alamy and you didn't get a payment until after April 5, 2016, then it would really simplify things.

 

Another benefit of doing it online is that there is a little question mark beside a lot of the boxes which will give further information - very useful indeed as it saves wading through piles of irrelevant text.

 

Finally, I'm wondering if the money you paid was a national insurance contribution which is now paid through your tax return.

[Stokie]

 

So my question is....... does anyone have any good tips about what to do and what not to do or where to get understandable advice from? The HMRC 'helpful' explanations require a degree in metaphysics to decipher. Any help much appreciated. :-)

When I first started selling photos I registered as a small trader and then attended a couple of free seminars run by HMRC for people starting up in business. I found them very useful, they explained the need to keep detailed accounts and covered what you could claim against tax etc. Don't know if they are still available, but worth pursuing if possible.

 

I have other business interests, but find the self assessment reasonably straightforward. I generally do mine around November time, when you should have all the required information to hand. Not sure how much you would need to earn before it becomes worthwhile to employ an accountant.

 

Thinking about this, I need to buy some kit to defray against some of my inconsiderable photo earnings for this tax year.....

 

I too attended the free seminars when first setting up my architectural design company. They are very useful, hope they are still doing them.

 

John.

[Jansos]

If you made mistakes you can simply modify your previous return online and resubmit it and it will recalculate what you owe or are owed. In fact, if last year was your first year doing a self assessment return, then you could probably go back in and do is as cash basis - you are asked if you do this early under the self employment section. As I said, I'm no tax expert so it might be sensible to query HMRC if it is ok to do this retrospectively. If you had no income other than Alamy and you didn't get a payment until after April 5, 2016, then it would really simplify things.

 

Another benefit of doing it online is that there is a little question mark beside a lot of the boxes which will give further information - very useful indeed as it saves wading through piles of irrelevant text.

 

Finally, I'm wondering if the money you paid was a national insurance contribution which is now paid through your tax return.

Hi MDM, That's useful to know - I didn't know you could go back in and modify a previously submitted tax return. I'll try and do that. Thanks! :-)

[MDM]

 

If you made mistakes you can simply modify your previous return online and resubmit it and it will recalculate what you owe or are owed. In fact, if last year was your first year doing a self assessment return, then you could probably go back in and do is as cash basis - you are asked if you do this early under the self employment section. As I said, I'm no tax expert so it might be sensible to query HMRC if it is ok to do this retrospectively. If you had no income other than Alamy and you didn't get a payment until after April 5, 2016, then it would really simplify things.

 

Another benefit of doing it online is that there is a little question mark beside a lot of the boxes which will give further information - very useful indeed as it saves wading through piles of irrelevant text.

 

Finally, I'm wondering if the money you paid was a national insurance contribution which is now paid through your tax return.

Hi MDM, That's useful to know - I didn't know you could go back in and modify a previously submitted tax return. I'll try and do that. Thanks! :-)

 

 

Yes you can definitely modify earlier returns. You might want to check with HMRC if you can retrospectively modify the accounting method (traditional v cash basis) although if you had no earnings in the previous year I can't imagine that it would matter.

 

I'm not sure if there are still free courses available. I did an excellent 5 day government-funded start your own business course in 2009 but that is no longer available (public service cuts no doubt).