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Where Taxpayers and Advisers Meet

Earning Extra Income

Onale101
Posts:1
Joined:Wed Feb 24, 2021 4:10 pm
Earning Extra Income

Postby Onale101 » Wed Feb 24, 2021 4:21 pm

I am thinking of trying to boost my income by selling online.

I am unsure about how and what tax I would be expected to pay if I did this.

I am also currently employed and earning a salary of approx 21,000 gross so around 18,000 net which gets taxed accordingly.

How would it work if I started selling as a registered business online? When working it out Would I have to declare what I earnt as a salary aswell as any income received online and then tax gets adjusted accordingly. Or would I just ignore the tax from salary and only declare earnings from items sold?

Also, I keep hearing conflicting information surrounding the amount to be taxed. For example, would I get taxed on all sales irrespective of overhead costs or do I need to work out sales and deduct costs to get profit and then declare that?

Also, am I right in thinking that when selling online you get a threshold limit of £1000 per annum of sales before it can be taxed? Again, is this total sales or total profit? And does this still apply when earning a salary?

Many thanks

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Earning Extra Income

Postby pawncob » Thu Feb 25, 2021 12:28 pm

https://www.moneyadviceservice.org.uk/en/articles/thinking-of-starting-up-in-business

https://www.gov.uk/set-up-sole-trader

You pay tax on your profits, not your turnover.
With a pinch of salt take what I say, but don't exceed your RDA

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Earning Extra Income

Postby Jholm » Tue Mar 23, 2021 2:03 pm

£1,000 turnover before you are required to report income.

If turnover > £1k but expenses < £1k, then claim the £1k allowance in place of expenses.

If you expect significant income, I would strongly suggest to appoint a professional, as your query suggests quick basic misunderstandings (no fault of your own). Sometimes a small additional cost can save more in the long run.


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