Self-Employed Affiliate Marketer Tax Situation

[tomraffe]

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So I'm self employed for my web design services, but I also generate income through affiliate marketing on my own sites.

Should I be counting my affiliate marketing revenue as taxable income on my tax return?

I think I know the answer, but would rather keep the 20% if I could

[tom991]

Quick answer...
Yes!

Typically under the 'Any other income' section of your self assessment (paper form or online)

Good thing is you can also claim expenses, e.g. domain registration, hosting, PPC, etc., which will be deducted from your 'other income.'

Alternatively, you could try to hide your income from HMRC, and risk prosecution. :cry

Hope this helps.

[tomraffe]

Cool, thanks for your reply. I'm sure there are a lot of people out there that earn an extra few quid through affiliate marketing and don't declare, but I spose I'll just have to do the legal thing...

[Mogga]

Cool, thanks for your reply. I'm sure there are a lot of people out there that earn an extra few quid through affiliate marketing and don't declare, but I spose I'll just have to do the legal thing...

I'm sure the networks speak regularly to the tax man.

[hrbs]

So I'm self employed for my web design services, but I also generate income through affiliate marketing on my own sites.

Should I be counting my affiliate marketing revenue as taxable income on my tax return?

I think I know the answer, but would rather keep the 20% if I could

Hi

Yes you must include all income/profits on the tax return. Depending upon your total profits, Class 4 NI at 8% (or 1%) would also be charged on the profit as it is from a trade (advertising).

When you submit the return you sign it to say that "The information I have given on this Tax Return and any supplementary pages is correct and complete to the best of my knowledge and belief".

If HMRC find out that you have omitted income they will at the very least charge penalties and may also enquire into earlier returns. This would be very time consuming and potentially costly in terms of professional fees and the detrimental effect on your business. The more time you have to spend dealing with the investigation, the less time you have available to earn a living.

If you need a list of expenses you can claim against your income check out my article at http://hrbs.biz/id?10102 .

For others who have AM income but do not declare it ... if your income is small, you may be actually running at a loss when taking into account hosting, broadband, domains, PPC, books, software, allowances on computer equipment etc. The loss can be claimed against other income and a tax refund may be due. This is often the case when starting in AM where costs can outweigh income in the first year whilst the business is being developed.

VAT:
You should also consider the effect on VAT registration as the AM income and Adwords costs would also count towards the VAT registration threshold, because as a sole trader, you are the "taxable person" for VAT. In general, all businesses you run as a sole trader (web design , AM etc) are considered to be part of the same business for VAT purposes.

For information on why Adwords costs count towards the VAT registration threshold see my article at http://hrbs.biz/id?10103 .

Regards

Keith
http://HRBS.biz