UK Taxation: Do you need to pay tax on revenue gathered from advertisements and donations
I have a plan for some software / services that I believe can generate some cash through advertisements, selling 'pro' versions of the application in their respective 'app stores' and through donations.
I have a full-time job, and I am wondering where I stand when it comes to tax. Does the income from this count as pay? Do I need to register myself as a trader, or create a company?
2 Answers
Yes this counts as income. In the UK you will need to register for self-assessment http://www.hmrc.gov.uk/sa/register.htm and declare this additional income.
Personally I wouldn't set up a LTD company until you are sure that this is going to be a significant enough income stream to warrant the effort. However when you do this it is not a difficult process and will almost certainly be a more tax efficient approach. Also keep track of the costs you incur creating this product, as you will be able to reclaim some of them.
If you already have a full-time job, you should probably also check your contract to see if there are any issues with you doing this on the side.
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+1 what he said. – Edralph 13 years ago
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Thank you for the helpful answer! – Krslynx 13 years ago
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I'm not completely certain whether you should also register as self-employed in this circumstance as part of the self-registration process maybe someone can clarify or you can check with HMRC who are generally helpful. – Yojimbo 13 years ago
Does the income from this count as pay?No, the government is totally happy for yo to not pay income tax. Actually when you grow and become a hugh advertising income business like google, you never pay any tax.
Heck, do you really think the government is stupid?
You have to pay income tax on YOUR INCOME. Not "on your income except", ON YOUR INCOME. Donation are nothing more than income, otherwise I would happily "donate" my work to my clients in return to them donating their moeny to me.
I agree with your obvious assessment that the governments are mostly run by idiots, but sadly I have to inform you this idiocy does NOT extend towards ignoring income that can be taxed ;)
Do I need to register myself as a trader, or create a company?Different question and depends a lot more on what you like to grow to and other elements of your strategic setup. In the UK a LTD is cheap to set up, though, so I would just do it.
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Nice for the -1. Where do you live? North Korea where the art of.... making answers in a funny way is getting you 6 months labor camp? – Net Tecture 13 years ago
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Unfortunately for me a down-vote requires 125 reputation; having just joined I have 7. You likely got the down-vote for answering the question in an un-funny way that just made you seem like a dick. – Krslynx 13 years ago
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Boom! Seems like not everyone likes your particular 'style' NetTecture. Who knew? ;) – Ryan 13 years ago
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More: who cares. I don't. – Net Tecture 13 years ago
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@NetTecture: I am sorry, but you are wrong with the "no exceptions" thing. There are exceptions, for example in some countries income from berry picking is tax free: eg. in [Finland](http://www.berryjob.com/?q=node/10), also in Poland. – Miernik 12 years ago
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@NetTecture: also for example in Poland, "income" from donations is tax free up to a limit of 4902 PLN (about 950 GBP, 1500 USD, 1170 EUR) per person (person donating to me) per 5 years is free of tax. – Miernik 12 years ago
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Yes, but it is not deductable for the spender, which means he looses - because there is no paperwork. I am quite sure (I could check tomorrow with my accountants) that a donation to a school for material etc. IS tax deductable. With invoices provided. So this is not so much the income side that is a problem but the side GIVING the money. – Net Tecture 12 years ago
