It
is a common misconception that money made online is tax-free. The
truth is that you need to pay taxes on all your income, whether it is
made in a traditional way or earned online. It is just that at most
times the money you make online is less than the 'Personal
Allowance'( a small amount earned in a year on which you do not have
to pay tax). In this article I'll clear this misconception and
provide links to help you gain a deeper insight on the subject.
Paying
Taxes on Money Made Online
Defining
Tax
Investorwords
define the word 'tax' as:
Who
has to Pay Tax in the UK?
“If
you work in the UK, you will usually have to pay Income Tax and
National Insurance on your wages. How much you pay - and how you pay
- depends on how much you earn, and whether you work for someone
(employed), or for yourself (self-employed)”.[2]
So
virtually everybody has to pay taxes on their income, even if it is
earned online.
Do
You Need to Pay Taxes on Online Money?
The
answer to this question isn't very straight forward. It depends on
how you're making money and how much. If you are just selling a few
goods which you no longer need or are surplus to your requirements,
then this is not considered trading and it is not taxable.
If
you have another employment and you are buying and selling with a
view to profit, then this is taxable. If you have made selling a
large number goods or services online your business, then you definitely need to
register if your income is likely to be above the national insurance
limit in the year.
Eligibility
Criteria
The
HMRC has different rules and taxation amounts on income amounts
depending on criteria like: how much you make in total, what your age
is etc. You may not necessarily have to pay tax on your online income.
However, regardless of where your income comes from, you need to
declare all of your income sources to the HMRC.
To
find out if you are liable to pay taxes on your online income, you'll
first need to find out whether or not you are self-employed. To find
this out, follow this link to HMRC's website where you'll be able to
do an online
self-assessment.
You can also use it to declare your income online without much
hassle.
Please
note that declaring your income made online does necessarily dictate
that tax will be due on your earnings. By doing so, you only make
sure that all your earnings are reported to HMRC as a legal
requirement.
Understanding
Paid Surveys and Making Tax Contributions
What
are Paid Surveys?
Opinion
Outpost, Toluna and many others offer individuals to register to
their
websites
for
free. Once you’ve done that, you are sent invitations to
participate in surveys. It is very important for large companies and
big brand names like Coca Cola to get the opinions of public about
any new idea they’re about to launch. To do that you actually get
paid to express your opinions without needing any special
qualifications or experience. It won’t give you money enough to
survive on but something extra on top of what you normally earn is
always good.
Paying
Taxes on Survey Income in UK
We
know that income from surveys just gives you some extra cash to spend
on household expenses. So as UK survey taker, do you need really to
pay taxes on the small amount of money you make from taking online
surveys? The answer again is: 'It depends on how much you earn.'
Tax
Advice for UK Survey Takers
Taking
online surveys is counted as self-employment in the UK and apparently
is subject to taxation. It is best to declare your annual income made
through surveys to HMRC during tax time each year. It just gives HMRC
an idea of your income sources.
Tax
Liability on UK Survey-Takers
There
is no tax due on you if overall earnings do not exceed a certain
amount called Personal
Allowance.
This amount depends on factors like the age and total income of the
individual. At present (tax year 2012-13), it is £8,105 for all
individuals under the age of 65 and making under £100,000.[4]
The
income derived from taking surveys must still be reported to HMRC.
However, under the personal allowance, it is highly unlikely that any
taxes will be incurred on it. The criteria can be a bit different and
complex for different individuals who work differently. To make it
simple to understand: if the total income earned by a person (aged
less than 65) from all the sources is less than £100,000, only the
amount over £8,105 (the personal allowance) is subject to tax by
HMRC.
Conclusion
Although
the amount earned from taking paid surveys may be less than the
personal allowance and not be taxable, it is best to declare your
earnings to HMRC. In this manner you fulfil your duty as a resident
or citizen of UK and enjoy more benefits.
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