Making money from a hobby

by **jonners99** on Tue Mar 17, 2009 12:27 pm

I build websites in my spare time (away from my main job) and would like to start earning some pocket money from it. I am likely not to earn more than £200 a month... as I like my spare time. But what do I need to do to make these earnings legal?

by **robbob** on Tue Mar 17, 2009 1:08 pm

Hello jonners

You will need to registed with the revenue as self employed once you start to receive income (Within 3 months)
You will then need to do tax return every year (They are issued approx 5th April each year as this is end of tax year)
If your earnings are low you will probably want to apply for exemption from paying NI monthly self employed stamp (Class 2)- there is no point paying this if your earnings are very low and you pay stamp via employment income.

by **robbob** on Tue Mar 17, 2009 1:08 pm

Hello jonners

You will need to registed with the revenue as self employed once you start to receive income (Within 3 months)
You will then need to do tax return every year (They are issued approx 5th April each year as this is end of tax year)
If your earnings are low you will probably want to apply for exemption from paying NI monthly self employed stamp (Class 2)- there is no point paying this if your earnings are very low and you pay stamp via employment income.

by **jonners99** on Tue Mar 17, 2009 1:14 pm

So I register as self-employed and fill in a tax return, do they then send me a bill with the amount of tax? Also is it free to register as self employed and be exempted from NI monthly self and how much is this if I don't get an exemption?

by **jonners99** on Tue Mar 17, 2009 1:32 pm

Also what difference does it make to my employer if I register as self employed?

by **Peter D** on Tue Mar 17, 2009 4:03 pm

As long as you pay the tax directly and not via a coding change that your emplyer would be informablout then they will not know. However if you normal job is directly, or may be even indirectly associated to web design then you may need permission to conform to the T's and C's of your employment contract. Regards Peter

by **jonners99** on Tue Mar 17, 2009 4:10 pm

Lets say I earn £2000 a year from my hobby, how much tax would I be likely to be charged from that?

by **Peter D** on Tue Mar 17, 2009 6:52 pm

The exatra income is added to your paye income to establish the marginal rate so if you normally fall short of the 40% threshhold by at least £2000 then you will pay 20% tax so £4000. Remember this profit is after all deductible allowances. Regards Peter

by **jonners99** on Tue Mar 17, 2009 9:42 pm

So I earn £14,000 normally. If I had a hobby which got me £2,000 a year extra it would just count as £16,000 income? I thought seperate jobs counted as seperate tax amounts?

I guess if my hobby has no expenditures this is all it comes down to then?

by **Peter D** on Wed Mar 18, 2009 3:31 pm

Sorry typo £400 extra tax. What about S/w Coats even a new PC and LCD screen to check compatibilty, research cost, a proportion of heating and light costs in your home, admin, subsription fees, posting out invoices, banking costs. Travel costs to visit clients. Regards Peter