Affiliate website - tax, vat and self-assemssent

[jase951]

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Hi

OK, so I have an affiliate website...promoting products etc with affiliate links attached. As a result I have gained revenue from affiliate engines (e.g. TradeDoubler) of approx £100/month for a while now and about the same profit.

I'd like to know how tax and self-assessment works, in the UK?

From what I understand:
- I need to register as self-employed
- I am exempt from National Insurance (£2.20) since I earn less than ~£4,600
- I am exempt from Tax because of low profit
- I do not need to be registered for VAT and thus do not claim VAT
- Every year I am sent a self-assessment form; which I (an accountant is not needed) fill out about profit and earnings - On returning the form I should be sent a bill of ZERO because I am exempt

Can someone tell me if I'm doing this right?

Also, I am told that there is no need for an accountant to fill out the self-assessment; so I think using software like Sage will help: anyone got any suggestions on similar software or can anyone recommend which Sage software to use?

Thanks a lot!

Regards
Jason

[Wardy]

Do you not have anotehr job? Are your affiliate earnings your only source of income?

Cheers
Wardy

[fizzbird]

Hi

OK, so I have an affiliate website...promoting products etc with affiliate links attached. As a result I have gained revenue from affiliate engines (e.g. TradeDoubler) of approx £100/month for a while now and about the same profit.

I'd like to know how tax and self-assessment works, in the UK?

From what I understand:
- I need to register as self-employed
- I am exempt from National Insurance (£2.20) since I earn less than ~£4,600
- I am exempt from Tax because of low profit
- I do not need to be registered for VAT and thus do not claim VAT
- Every year I am sent a self-assessment form; which I (an accountant is not needed) fill out about profit and earnings - On returning the form I should be sent a bill of ZERO because I am exempt

Can someone tell me if I'm doing this right?

Also, I am told that there is no need for an accountant to fill out the self-assessment; so I think using software like Sage will help: anyone got any suggestions on similar software or can anyone recommend which Sage software to use?

Thanks a lot!

Regards
Jason

Yes you need to tell your tax office that you are running a business,
No you are not exempt from National Insurance - you are liable to register for and pay class 2 contributions (unless you have an excemption due to expected low earnings - which you have to apply for)
your total national insurance liability (class 4) will be calculated when you submit your annual tax return.

Your earnings from self employment are declared seperately from your other earnings on the form but the final calculation includes both.

So, if you keep proper records and claim everything as an expense that you are able to, you could well find that the net result is a payment to you from the inland revenue.

If you do your return online, promptly, this is now quite efficient.

This year I did my return the second week in April and my tax refund was in the bank and cleared before the end of the same month!

If your affiliate income is liable to stay around the current levels and if you maintain your normal employment, the only software you need is a pen and paper!


PS: I'm not qualified to give you this advice so obviously you should consult your tax office to be sure. (by the way - the National Insurance thing isn't enforced so applying for exemption is a formality)

[hrbs]

Hi Jason

There are many other people in your position and so there are quite a few postings on this subject on the forum and at Thinking of starting a business? | Business tips from High Royd Business Services Limited .

As other people have said you must register as self employed within 3 months of starting to trade otherwise you are likely to receive a £100 penalty. Registration is easy (the above link explains how).

Class 2 NIC must be paid unless you have a job in which you earn over the upper earnings threshold and pay maximum NIC. A Small Earnings Exception means that if your profit (as reported on your tax return) is lower than the threshold you will not pay Class 4 NIC. However you may still pay income tax as all your income is added together tor tax purposes. In the early period of trading you may actually generate a loss which can be offset against your other income and get a tax refund (as Fizzbird rightly says, refunds are processed quite quickly these days if you complete your return online).

Many of my affiliate marketing clients use a simple spreadsheet to "keep the books". I would strongly recommend opening a separate bank account for your affiliate earnings so that your private and business affairs are kept separate just in case your return is selected for investigation. It also means that it is easier for you to keep your accounts.

The online tax return system (and helpsheets) is pretty good. You must ensure that you report all income on the tax return (including interest etc) as when you submit it you are confirming to HMRC that you have done so. If you have omitted any sources of income and HMRC find out about it you will need to pay any additional tax due and you will probably be penalised. HMRC started targetting online/ebay traders and affiliate marketeers early this year (there were banners on this forum as well as elsewhere) so I would suggest you register ASAP.

An article showing which expenses can be deducted for tax purposes is at Tax deductible business expenses .

If you need any guidance feel free to PM.

Good luck with the business

Kind regards

Keith
High Royd Business Services Limited
Fixed Fee Accountants and Small Business Specialists - High Royd Business Services Limited
Small business and affiliate marketing specialists

[jase951]

Do you not have anotehr job? Are your affiliate earnings your only source of income?

Cheers
Wardy

Hi Wardy

Nope I have no other job atm, I'm a student - so yeah it is my only form of "working" income.

Thanks!

[jase951]

Hi all

Thanks for all the replies.

Sounds like I'll be able to apple to be exempt from NIC (or, at least get refunds on it). I didn't realise you can do the self-assessment online is there a link to it?

Fizzbird thanks for the advice on pen and paper - sounds good looks like I'd be able to cut most costs out. When you say "you need to tell your tax office that you are running a business" is this the same as sending off for registering as self-employed?

Cheers!

Regards
Jason

[hrbs]

Hi all

Thanks for all the replies.

Sounds like I'll be able to apple to be exempt from NIC (or, at least get refunds on it). I didn't realise you can do the self-assessment online is there a link to it?

Jason

HMRC link to register for SA online is
https://online.hmrc.gov.uk/login?GAR...rc.gov.uk/home

Regards

Keith

[fizzbird]

Hi all

When you say "you need to tell your tax office that you are running a business" is this the same as sending off for registering as self-employed?

I think so yes. Best to start off on right track.

In my case I work in construction as my main job and do work as employed and self-employed . So I am registered as 'self-employed' even though I have had odd years where I have not done any self employed work and have still had to do a self assesment that shows zero income & zero expenses. (In theory, I could still claim some allowances when this happens but choose not to as it's not worth the hassle).

To further complicate things, I also can be employed by 10 companies in any given year and this gets quite complex, especially when you start claiming for mileage and non-reimbursed expenses, etc.

I find that once you get to grips with the system it's fairly simple to manage, but make sure you keep accurate records of everything to back up any claim you make.
I've been investigated twice for quite petty sums - I was even questioned in detail about a mileage claim from 2 years back. After 3 months of 'investigation' it turned out I had overclaimed about £12!

I would say that once things start to get complicated it's better to seek professional advice at the outset, rather than waiting until you loose the plot and then seeking help.

But, at the level you are at it should be fairly easy to stay in control.

[jase951]

Hi

Thanks for all the replies.

Is it as easy as this?

What are the chances of me having the tax man check the figures; especially when I plan to claim back/not pay any tax because I'd be exempt?

Regards
Jason

[fizzbird]

Hi

Thanks for all the replies.

Is it as easy as this?

What are the chances of me having the tax man check the figures; especially when I plan to claim back/not pay any tax because I'd be exempt?

Regards
Jason

It's always a possibility, as I say, I've been investigated twice (even though they said it was just a random inspection).

As long as you can account for everything there's nothing to worry about. I know tradesmen who have been collared for doing the odd job on the side for an odd £100, yet they've traded for years without ever claiming for even the most obvious expenses!

It's all a matter of keeping on top of the paperwork and claiming for everything you can.

[luvvit]

hello all,
jase951 .... i also will be starting along the self employed /still working / studying line of things at the end of the year.

i have found a little bit of freeware that looks like it may do the job for you instead of pen and paper. its free and its called Easy Cash Manager. I am not involved with this programme in any way shape or form but it seems easy to use and it may well help a few new starters. A search in G/Y/M should provide an appropriate link for you.
regards

[fizzbird]

hello all,
jase951 .... i also will be starting along the self employed /still working / studying line of things at the end of the year.

i have found a little bit of freeware that looks like it may do the job for you instead of pen and paper. its free and its called Easy Cash Manager. I am not involved with this programme in any way shape or form but it seems easy to use and it may well help a few new starters. A search in G/Y/M should provide an appropriate link for you.
regards

Looks like a good idea - Have you tried it out?

I used to use MS Money which was pretty good for everyday account management but I found that I had to keep up with it - once you get a draw full of receipts collected it can be a bit of a tedious task to then enter each detail individually.

I tend to just use excel now - easy to put the basics in and then tidy-up the details as and when?

[max99]

quick question, i use excel to record revenue, advertising costs etc...for each day that happens. Is it better for me just to record payments taken from me from google and Aff network payments to me instead of breaking it down to each merchants ?

[leec]

quick question, i use excel to record revenue, advertising costs etc...for each day that happens. Is it better for me just to record payments taken from me from google and Aff network payments to me instead of breaking it down to each merchants ?

Hi Max,

You only need to note down each payment that comes in & goes out of your bank.

No need to do it for each merchant.

[max99]

crap. waste time, well suppose helps me see what merchants doing what each day.

cheers for reply.