Whether you’ve just started blogging or been at it for ten years, you need to know about paying tax as a blogger.
You started blogging for the love of writing, sharing or telling a tale. This little corner of the internet is all yours….but it might not stay that way for long.
Slowly (or quickly) you are approached to review, take money for sponsored posts or advertising. Blogging can be a real earner for good writers and those that have worked hard towards their page rank. Companies want to share your little corner with you and for cold hard cash.
Earning an income from blogging isn’t for everyone, but if you do choose to start monetising your blog, there are certain things you need to know.
DECLARING YOUR INCOME
When you start earning money from your site, you need to declare it. Even if the amounts aren’t huge, and you see the cash as “pocket or hobby money”, it is still payment for a service you are providing, in the eyes of HMRC.
So the cash you earn needs to be declared as earnings. and the appropriate tax and National Insurance paid on this amount. If you are earning under £9,440 a year it might be that tax won’t be owed, but National Insurance is around £65 every six months, so you will need to at least budget for that.
REGISTERING WITH HMRC
If you haven’t already done so, you will need to register with HMRC as a freelance writer or content provider. You will then receive a unique tax number with which to file your return online. The tax return can be pretty simple to fill in, but for around £135 you can pay an accountant to ensure that this is completed and sent off properly (and on time).
The most important thing is to keep a record straight away. Keep all invoices and all expense receipts (conferences, bus tickets, web hosting etc) and make a note of your income and expenses on a spreadsheet. Keeping track and staying organised is really important, because late penalties start at £100.
The online system helps you to work out what you owe and then allows you to pay in monthly or annual instalments. This means you can manage your money accordingly.
There is more information about registering with HMRC on our previous Back to Blog School Post: So you want to be a Pro Blogger?.
WHAT YOU NEED TO DECLARE
When you make a note of your income, you need to make sure you don’t miss anything out. These are the things you need to keep track of:
- Any income made from sponsored posts
- Any income made from advertising
- The value of items received for review, that you decide to keep
- Any cash made from selling review items
WHAT YOU CAN CLAIM AS AN EXPENSE
The good news is, there are also items that you can claim as expenses. It’s really important to keep all your receipts and, if you’re super organised, file them in envelopes such as “General Business Costs” and “Meals and Travel”. This will help you keep track of them if you need to find a particular receipt later on.
You can claim the following things as expenses:
- Any conference tickets and appropriate travel
- A hotel and a meal if an overnight trip is needed
- A proportion of bills in your own home if you use an area as a work space (a “work space” is classed as a separate area of your house, for example a third bedroom or office)*
- A use of the home allowance which is set at £4 a week towards light and heat
- A proportion of your phone bill and internet bills. If you don’t have a separate work phone, you will need to work out what percentage of your phone you use for business and personal usage
* Do bear in mind if you are using part of your home for business purposes and claiming tax relief, you may need to inform your insurance company, and your mortgage company.
WHAT YOU CAN’T CLAIM
There are certain items which you can’t claim as expenses. These are:
- Childcare costs
- Subsistence costs (apart from your proportion of the home allowance, as shown above)
- Your own wages
- Cost of clothing
- Loans of a personal nature
- Anything bought for personal use (like a personal mobile phone contract)
Have you registered as Self Employed yet?
How easy did you find it and what advice can you share to make it easier for others signing up?