The last two blogs looked at making sure all your income and expenses were accurately recorded. If you missed them, you can follow this link here for part 1 and here for part 2.
This blog will look at taxes for self employed bloggers as well as briefly touching on Making Tax Digital plus there is a free spreadsheet you can use to calculate your tax liability.
Income tax in the UK is currently due on the 31st January and 31st July although there are some big plans by the government to make changes to this under the title Making Tax Digital (MTD). One of the changes will mean sending in your income and expenses at least four times a year, so making a habit to keep on top of this from the start is a good idea.
In order to work out your potential tax liability for this year, you can use this FREE spreadsheet. This spreadsheet assumes you are self-employed.
Income tax is due on personal income earned such as income from employment, self employment and rental income. It also includes pension income, income from trusts and some state income. You can read more about income tax by following this link.
Every year when the budget comes out, there are two things that generally change – the personal tax allowance and the amount of income you need to earn before the basic rate of tax and the higher rate of tax is applied.
Another thing you need to consider, when saving for tax is the national insurance contributions. If you’re self-employed you will need to pay Class 2 flat rate which is currently at £3.00 per week and Class 4 on any profits. You can read more about national insurance here.
Making Tax Digital
I mentioned MTD earlier, a new HMRC initiative which will require filing a return four times a year. Currently, MTD only affects businesses whose turnover is above the VAT threshold of £85,000. These businesses will already be filing VAT returns four times a year so in a way it shouldn’t be that much effort or change to their admin work except doing it in a different way.
MTD for individuals is however still a long way away. HMRC has introduced online Personal Tax Accounts to encourage more people to do their tax returns digitally but that’s it for now.
So until your turnover reaches £85,000, you don’t need to worry about MTD. If your turnover does reach £85,000 though, you may want to look at incorporating if you’re currently self employed.
In the next blog, I will look at the different ways you can to create a company and which one is the best at each stage of your blogging superstardom.
As usual, if you would like any further details on this or any other accountancy matters, please follow this link: