Tax for Bloggers
In this world nothing can be said to be certain, except death and taxes
Tax is D. U. L. L. there are no two ways about that. No-one enjoys doing their taxes, but if we’re earning from our blogs then we all need to be complete our self-assessment and keep all the associated financial records.
I’m NOT a qualified tax professional, so please seek advice from someone who is. I’m just sharing my experience in the hope that it helps someone.
I will start by saying if you earn a single penny from your blog then you need to pay tax on it, which means registering as self employed and completing a self-assessment form. Anything and everything counts; money to send a tweet, a sponsored post. All income needs to be declared.
When do you need to register as self-employed?
As soon as you start thinking about earning from you blog it’s a good idea to register as self-employed. That way if you receive some money it’s all above board and you don’t need to worry.
Sole Trader or Limited Company?
You could choose to make your blog a Limited Company. Before you make a decision you need to make sure it’s the right decision for you. There are some benefits to being a Limited Company. You can pay yourself a salary from your own company and you can put many more expenses through your business than you are allowed as a sole trader. You will also have to charge and pay VAT (when your income goes past £81k), plus filling a VAT return.
As a Limited company you will have to pay 20% tax on your income until you reach the £41k threshold, after which it raises to around 40%. Most people would only consider becoming Limited if they were making a substantial income from their blog.
As a Sole Trader you are responsible for your business. In reality this means if you do something detrimental and a brand sues you and wins, they could take your assets, i.e. your house. Being a limited company protects your personal possessions in situations like this. Sole Traders have less financial paperwork to do than Directors of Limited Companies.
What else come under earnings?
You can earn up to the Standard Personal Tax Allowance which is £10,600. If you’re earning less than that, you shouldn’t have to pay tax, but you should still register, keep records and file your return. If you receive something via your blog, which you then later sell, you need to pay tax on the money you receive.
So you’re registered, what next?
The next step is to fill out a self-assessment tax form. On this form you detail your blogs earnings and expenditure over the tax year. It’s quite an easy process if you have all of your figures up to date and to hand (and have all of your receipts!). If you aren’t earning much from your blog (under £5,965 a year), then you could get an National Insurance Exemption. You will receive information from the HMRC which includes your UTR number which you need to keep in a safe place for when you come to file your return.
Keep your own records?
You might choose to do your own book-keeping or pay someone to do it for you. Make sure you keep good records of your income and expenses. This will make the whole process much easier, when it comes to filling out your self-assessment.
It’s a good idea to create a spreadsheet on which you can detail all of your income and everything you spend that can be classed as a business expense. This spreadsheet is fabulous and it’s what I use for my accounts.
When do you have to file your return?
The tax year runs from April 6th to April 5th and then you have until the January 31st of the following year to file your self assessment forms. You can go onto the the HMRC site and file your own forms online.
What is a business expense?
These are expenses for the purchase of things which you need for your business. Anything used solely for your business (blog) can be offset against your earnings. It might be that you use your mobile for personal and business use and in that case you can claim a percentage as a business expense.
Keep all your receipts and file them in a logical way.
Here are some typical blog/business expenses:
- Your blog theme*
- Blog hosting
- Tickets for conferences
- Travel to conferences
- Hotel and meal if you need to stay overnight to attend an event
- A percentage of bills in your own home if you use an area as a work space
- A percentage of your phone bill, mobile and broadband
- Mileage to attend events (40p per mile)
- Your computer*
- Your camera*
- Business cards
- Courses that could be considered relevant to your blog
- Domain name fees/renewals
- Any blogging Apps
- Supplies for anything you use in a project you blog about
- Paypal fees
- Blog design*
- Blog tech help
- Any office furniture
- Buying music for videos
- Buying photos
- Any prizes you buy for a giveaway
- Memberships to anything blogging related
- Social media schedulers
- Professional assistance, such as a Virtual Assistant
- Accountant fees
- Blog coaching
*see capital expenses below
Things you can’t claim
- Personal loans
Anything you purchase for you blog, which will last a few years, such as your laptop or camera is a Capital Expense. These items are not lumped in with your other expenses, but they are put on a Capital Expense form instead.
There you go my guide to tax for bloggers. I hope this has helped you and if you have any questions please make sure you contact the guys at the HMRC.
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