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Do you receive additional income?

2020
19
OCT

As an employee you will be taxed on your earnings by your employer but you may also receive income from other sources.  There are lots of opportunities these days to sell items online or at car boot sales whether that is from turning out unwanted items to selling items that you have made yourself to earn a bit of "pin money".

You therefore need to know whether this extra income needs to be declared to HMRC.  HMRC have an interactive checker that will help you decide whether you need to declare your additional income.  

HMRC do not need to be advised of the sale of personal items unless you have sold a single item for £6,000 or more and you have made a profit on it.  Capital Gains Tax may be payable on this.

If you have received more than £1,000 of income from selling goods or services between 6 April one year to 5 April the following year you will need to complete a Self Assessment Tax Return to let HMRC know how much you have received.  Services can include casual work such as gardening, babysitting or deliveries or it could be additional work for your employer or another business which is not taxed at source.  It may be income that you receive for hiring out some equipment or tools that you own.  

The HMRC checker will indicate whether this additional income needs to be reported on a Self Assessment Tax Return.

If you have rented out a room in your home or received any other rental income including through online sources such as through Airbnb you must total all sources of income including any monies received for bills or food on top of the rental. 

If you are renting out a furnished room under the Rent a Room Scheme you can received up to £7,500 per annum tax free.  You cannot claim any expenses if you choose to use this scheme.  If you are not able to use the Scheme your rental income must be declared on a Self Assessment Tax Return.  If the income you earn from the rental is shared with one or more others the allowance of £7,500 under the Rent a room Scheme is also shared.

There was a recent report in a national newspaper that Airbnb was required to pay additional taxes by HMRC and also required to release details of those renting out rooms and properties.  Presumably, therefore, this will be an area HMRC will begin to investigate to identify undeclared income in excess of the allowance.

For information on registering for a tax return if you haven't done one before follow this link.  You need to register before 5 October in the year in which you have received the additional income which you need to declare.

 

 

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Old Sarum, Salisbury
Salisbury
Wiltshire
SP4 6QX

e: info@sandrasilk.co.uk
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