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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13864
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I run an online company and get paid in USD using paypal,

Resolved Question:

I run an online company and get paid in USD using paypal, I've gained around $22,000 in the past year and after running through expenses i've paid around $14,000 in expenses. What is required to write my expenses off and is it possible to write that amount of money off? I'm not currently registered as a business but i plan to at the end of the year.
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

Is this a limited company - in which country is this company registered, where do you under take the work (here or in the UK)

Are you a UK resident or citizen?

Wy have you not yet registered the business with any tax regime?

Do you draw a salary or dividends

Please advsie further

Thanks

Sam

Customer: replied 1 year ago.
I'm currently working a part time job drawing in around £6 - 8,000 a year without my second income.I run a online game which takes micro transactions from mainly american customers. I live in the UK and i am a resident, I'm currently in the process of changing my part-time hobby into a company which is why i am not a business yet. And no i do not generally draw salary from this secondary income
Expert:  Sam replied 1 year ago.

HI

Thanks for your response

Have HMRC agreed that this is an hobby? As if they have not then you have to declare this income. And it would seem this is NOT a company its just income from running this game ? Can you clarify as it would appear you should have been declaring this income to HMR from its start position - so when did you begin this ?

Thanks

Sam

Customer: replied 1 year ago.
I started around 5 months ago, It began as a hobby and i thought nothing of it as it become a little more serious. This will be my first year paying taxes as its the first i'll be earning over £11,000 in one year so i'm not awfully familiar to the tax process except i know that the dates where you must declare your earnings. By what I've been reading i know that i can't declare expenses without turning into a business.Thanks
Expert:  Sam replied 1 year ago.

Hi

Thanks for your response

Then you must inform HMRC that you started earning from this 5 months ago as I am afraid ALL income is liable to tax consideration and only HMRC can determine whether they feel this would be a hobby and there not be a need to declare.

You should have registered for self employment within 3 months of this starting so you will incur a late charge for registration. and even if you earn less that £10,600 for 2015/2016 and less than 311,000 for this tax year - you still have to make a full declaration of income.

Then whether you stay as a sole trader business - or choose to go down the route of setting up a limited company you then declare the total income earned, and offset this with the expenses you have incurred - and then are only considered for tax and National Insurance on the net amount - which is then added to any other income you have to full consideration.

This is done as HMRC will send you a self assessment tax return to fill in after you have registered. Initially they will ask for one for the period 06/04/3015 to 05/04/2016 - and again after each 5th April

Let me know if I can assist further

Thanks

Sam

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