Hi All, thank you for coming to my thread, I have been running my gaming community now since august of 2018 and have recently just looked into getting registered as a business or sole trader so that I can use some other payment gateways that require me to be registered, upon doing this I have been looking into taxing and what I should be doing in regards to tax. I will explain my situation and how I handle my server funds below.
The community I own, allows players to 'donate' (buy) virtual ranks / items, these ranks are paid monthly - since august I have pulled in just under 8500 (Yes I am doing this for profit, I have to pay server fees and other hosting fees which amounts to around £130 per month, the rest of the money is going directly to my business paypal and then directly to my bank) (I am not a registered business and do not have any other form of income, I do not have a job at this current time and the only form of income is the gaming community I am running) I am living in the UK and after researching income tax, I noticed that I am allowed to earn up £12,500 before being taxed (correct me if i'm wrong, I'm no expert) However, after researching around on how to get started as a sole trader, I've noticed I have to do the self assessment and a part of this process is declaring when I've started earning for it to be taxed.
My concern is when reading about the self assessment and registering as a sole-trader, have I been wrong in thinking that all that I have earnt so far (8500 - server costs) isn't taxable? Only reason I have thought this, is due to the allowance of £12,500 allowed in the UK. If I am wrong and have been in the wrong and have been avoiding tax, what is the best way to go about this? This was not intentional and wish to get this setup correctly so that not only I am abiding by the law but also setup for future in case I do earn over the yearly allowance allowed before tax.
Yes, I will be looking into registering as a sole trader or even going down another business route to avoid any future issues (Recommendations appreciated), as for the current - All donations (payments) have been logged onto two systems as well as my business paypal from the very start, which clearly shows exactly how much I've earnt as well as how much I've spent on hosting / server costs + the amount I've been sending myself for profit, so if it does come to it and I have been in the wrong, I can prove how much I've earnt and will be able to pay anything owed if applicable.
All and any advice is appreciated, looking to get this sorted as the more I think about it the more I stress, finding this forum was my best option for tax advice that I required.
Thanks in advance, James