Earning extra money selling your wares on eBay, or craft fairs and car boot sales are great ways to earn some extra income. But what would the taxman say if he knew that you haven’t declared your extra earning?
A lot of mumpreneurs and stay-at-home mums who are making money doing a little bit of this and selling a little bit of that are often shocked on hearing that they need to let the taxman know about their extra income. And this is something that needs to be done within three months of using a regular route to earning extra money – even if it amounts to a very small amount every year.
The fact is, it’s not always about paying tax – you could end up getting some money back on allowable expenses, but you won’t if you’re not declaring the income in the first place! If you know what to do (and you can use accounting software to help if you’re not sure), you won’t be left out of pocket.
Who needs to complete a self-assessment tax return?
You will need to complete a Self Assessment tax return each year if you are self-employed or are a partner in a business partnership.
Even if you don’t run your own business officially (i.e. you don’t have a business name, or website, but just sell things or provide a service yourself), you may need to complete a tax return if your tax affairs aren’t straightforward, even if you already pay tax on your earnings through your tax code.
When it becomes mandatory to complete a self Assessment tax return
There are also other circumstances in which you will always need to complete a tax return – for example if you’re
1. a company director
2. a trustee
3. receiving foreign income
Completing a self-assessment tax return can seem daunting for many people when doing it for the first time, but there are some great online accounting software packages on the market that will make it a doddle.
With April fast approaching, now is the time to start getting your receipts, invoices and bank statements together and preparing your paperwork for when you need to complete the tax return, so you don’t feel under pressure when the time comes.
