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Where Taxpayers and Advisers Meet

Webcam Model looking for Tax advice

Whoknows

Webcam Model looking for Tax advice

Postby Whoknows » Fri May 22, 2020 2:05 pm

Hello I am planning on beginning online webcam modelling but also have a full time job, I plan to keep my full time job whilst i perform on the Cam site and want to make sure i keep all my taxes above board and legit.
I am not employed by the Cam site and i am responsible for processing my own Tax. I earn around 16,000 pound annual from my full time job. i have not received my first payment from the cam site but know i must pay tax on any earnings I receive in the future.
I would greatly appreciate any advice or links I could be given on how to pay my taxes whilst still being in full time work without my Cam career affecting my PAYE and Tax code for my current full time job.
Is there a way of operating my Cam Tax and Full time job taxes and two separate things.
Sorry if any of this does not make sense that's why i'm asking! All advice is appreciated.
Thank you.

Lambs
Posts: 1459
Joined: Wed Aug 06, 2008 3:15 pm

Re: Webcam Model looking for Tax advice

Postby Lambs » Fri May 22, 2020 4:16 pm

S,

They are already separate.

If you are running your own cam site / subsidiary-site then you will be self-employed which is entirely separate from employment. Assuming you make more than a very modest amount out of that self-employment, then you will need to:

Tell HMRC about your new source no later than 5 October after the tax year it started (so if you started on or after 6 April 2020 - the 2020/21 tax year - then you have until 5 October 2021 - I repeat, 2021 - to notify HMRC. If you started before 6 April 2020 then you started in the 2019/20 tax year and have until 5 October 2020 to notify HMRC. If you started before 6 April 2019 then you are now late).

See HMRC's website at

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

Depending on the level of your self-employed income, you may also have to pay the Class 2 NIC 'stamp' and/or Class 4 NICs. Assuming you started on or after 6 April 2020, then your first self-employed tax/NIC payment through Self Assessment will not actually be due until 31 January 2022, so you have time to prepare (although note that the first payment does tend to be quite large, as you have to "catch up")

By default, where your tax-free Personal Allowance is currently allocated - your full-time job - and its PAYE tax code should NOT BE DISTURBED by this new self-employed source. This would change if your earnings from self-employment were so large (more than £100,000) that your Personal Allowance was restricted but that would be unusual. I cannot guarantee that HMRC will not accidentally tinker with your code but it would be quite irregular. You could "double-underpants it" by telling them that you want your standard allowances, etc., to continue to be set against your PAYE source but personally I would consider that overkill.

Just for completeness, even where you have 2 PAYE sources - 2 employments - you can still usually tell HMRC where you want your PAYE code / tax allowances to be allocated so you could still ensure Job #1 stayed as it was (again, subject to the warning that if your total income got too high, then your code(s) would HAVE to change anyway).

As you may already have realised, your tax affairs are strictly confidential. Your employer/colleagues should never be able to find out about your other income, however derived, from HMRC. HMRC will divulge such information to third parties ONLY when required to by law (typically divorce proceedings) or if you gave permission. But please also bear in mind that your contract with your employer MAY have something to say about taking on other work from 'outside' while working for them (but that is a legal matter, rather than tax, and I am not qualified to advise on legal matters).

Note that when you come to work out your self-employed profits on which you will have to pay tax, then you will be able to deduct ongoing costs incurred such as fees, part of your telephone bill, broadband, and the cost of running your site/studio, even if it is from home. Also, you can deduct (basically only once) the cost of fixed assets such as camera, laptop, lights and props, until you replace them.

Hope this helps,

Lambs

Whoknows

Re: Webcam Model looking for Tax advice

Postby Whoknows » Fri May 22, 2020 4:43 pm

Thank you so much this is perfect and you probably just saved me a very large bill surprising me in 2022!
Many thanks again.

phoenix8
Posts: 2
Joined: Mon May 25, 2020 12:09 am

Re: Webcam Model looking for Tax advice

Postby phoenix8 » Mon May 25, 2020 12:24 am

Lambs,

I hope you do not mind you adding to this thread and also asking you for some advice also? Please direct me to a more suitable thread if I should be asking for advice there.

I am in desperate need of some help in respect of a webcam modelling agency/business I have set up. Unlike the lady who asked the original question in this thread, I am not performing or doing any modelling work myself. I have a group of models who I provide management and support to as well as doing marketing and promotion for them in order to boost their business and get them clients. The way my business works is each week I will gather in the money made by each of the models, and I receive this money to my bank account. I then issue payments via bank transfer to each of the models individually depending on what they have each earned.

My concern and query is what are the rules around things like NIC, PAYE, are they employees, or are they subcontractors, or something else altogether? I do not wish to employee these models, nor do they want to be employed. They view themselves as self-employed models who are responsible for their own tax affairs, and that suits me just fine. However, I have read somewhere that they could be viewed as my employees as I am the one paying them each week. They do not issue me with any invoices and I read somewhere that to be a subcontractor you really have to issue an invoice for your services. Is this correct because I am going mad with confusion and can't work out what the position is?

Essentially, I provide support, management and marketing to webcam models, acting as an agent/agency, and I also issue the payments to the models when they request it. So the websites pay me, I then pay the models, and currently, the models are doing self-assessments each year themselves as sole traders.

What do you think? Any advice? I would be eternally grateful.

Lambs
Posts: 1459
Joined: Wed Aug 06, 2008 3:15 pm

Re: Webcam Model looking for Tax advice

Postby Lambs » Mon May 25, 2020 6:47 am

P,

In broad terms there is indeed a risk that you could be perceived as employer. It would depend on the nature of the relationship that you have with your models, the extent of control you have over their work and various other factors. Having said that there is a risk, it seems to me that the relationship could be managed so that the risk is significantly reduced.

This may seem at odds with what I said to the original querist. But the inference I drew from the original post was that it was being operated on a 'large' cam site whereas it sounds like yours might be a more bespoke affair with a closer or more direct business relationship between you and the models involved (I may be wrong on either or both counts but it's difficult to be sure in a forum setting)

However, my greater concern would be in relation to VAT. I don't know if you are VAT-registered or indeed if the turnover in this business is close to / exceeding the VAT registration threshold. But generally speaking, the measure would be against the gross income you take - i.e., inclusive of all the money that belongs to the models rather than just your 'slice'. It therefore becomes much 'easier' for you/your business to hit the VAT threshold, particularly if you also have other sources of business income.

Both of these areas can get quite involved and might well require consideration of the precise terms of the arrangements / contracts you have, alongside what actually happens "on the ground", and whether the customer believes he or she is paying that person or an agency.

Both employment and VAT/agency are areas where there tends not to be one specific determinative factor - the situation needs to be looked at "in the round", and it will be a struggle to manage this in a forum setting. However, I strongly recommend that you seek advice from a suitably qualified professional on these issues - get them sorted now, rather than years down the line.

With regards,

Lambs

phoenix8
Posts: 2
Joined: Mon May 25, 2020 12:09 am

Re: Webcam Model looking for Tax advice

Postby phoenix8 » Mon May 25, 2020 9:39 am

That is very helpful, thank you. If I may give you a bit more details perhaps it will give you a clearer picture and you could give me your gut feeling on what I should do / how I should operate?

So I do not run or own a cam site. I simply operate an agency service (which is a limited company by the way) on a very large established cam site that is owned by someone else. I have no contract with this website, they are just providing a platform for models to work and agencies to operate. So my business works like this. I independently advertise and talk to models who may be interested in making money from webcam modeling. I then support them and arrange everything from their profiles being built, teaching them how to use the software, and managing bookings and emails etc. The website pays me each week based on what the models have earned, and then I pay the models.

There is no contract of employment between any party at this stage, everyone is responsible for their own tax affairs, and I am obviously responsible for the VAT issue.

As it stands, no one is providing invoices, other than a basic paper trail / statement within my online account between the website and me, showing what has been paid to me. I think I will be close to the VAT threshold each year as I will be turning over about £75k annually.

So, my questions are... Based on what I have outlined above, do you think I am fine to pay models as I currently am, without the need for any invoices, or treating them as employees? They themselves are free to do work on other websites, and independently, and many of them do. They are not exclusively working with me.

Do I need to worry about the fact the models are not giving me invoices as sub-contractors?

Am I right in thinking that as long as the total money paid to me from the cam website stays under £85,000 each year, I do not have to worry about becoming VAT registered?

robbob
Posts: 2950
Joined: Wed Aug 06, 2008 4:01 pm

Re: Webcam Model looking for Tax advice

Postby robbob » Tue May 26, 2020 9:43 am

So, my questions are... Based on what I have outlined above, do you think I am fine to pay models as I currently am, without the need for any invoices, or treating them as employees? They themselves are free to do work on other websites, and independently, and many of them do. They are not exclusively working with me.
You will never find an easy answer to this question, this a very grey area and therefore you would need specific advise in this regard to protect you and even then you could easily end up in a tribunal which decides the answer on a balance of probabilities (51% needed) if hmrc disagreed with your view. I would say at face value you possibly are very close to going over the line but equally there are many similar business types to yours that do not employee their "workers" there will never be any clarity here unless hmrc makes their rules clearer.

As a starting point hmrc provide the ability to do an employment status check to give an indictive answer, if this comes out ok ensure you print out details and repeat test ofetn (at least once a year)

https://www.gov.uk/guidance/check-employment-status-for-tax

You would probably be best served by using one of the specialists in this field such as qdos (qdoscontractor.com) to help with regard to drawing up contracts and providing ongoing specific support.

Presuming they are self employed you should never pay anyone with a proper invoice , the invoice should clearly show their main details including home address and i would recommend they also supply their UTR to prove that they are registered with hmrc.
Am I right in thinking that as long as the total money paid to me from the cam website stays under £85,000 each year, I do not have to worry about becoming VAT registered?
No - i am not 100% sure about the reverse charge treatment of cam modelling services but you would want to be careful about engaging eu based self employed individuals as the default treatment for business to business services is reverse charge in which case the payments you make to eu based models could be classed as your turnover for vat regitration purposes - note i am not saying this is the case it just is a deffo possibility that it could be.

On a similar them if you pay out money to non uk based companies providing services - eg facebook and google ads ! then in the same manner these payments are subject to reverse charge and will definately need to be added to your sales calculations for
What to include
To check if you’ve gone over the threshold in any 12-month period, add together the total value of your UK sales that are not VAT exempt, including:
services you received from businesses in other countries that you had to ‘reverse charge’
https://www.gov.uk/vat-registration/calculate-turnover


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