A popular question that has been asked, is whether or not people need to declare their extra income to HMRC, and if they do, what do they declare? If you're only selling unwanted items on eBay, then you don't need to declare any extra income. However, if you do online surveys, sponsored blog posts, mystery shopping, smartphone app earnings, and more. Even if you're working a full-time job and paying tax via PAYE, it is still mandatory to declare your extra income. The whole process of registering yourself as self-employed then completing a self-assessment each year takes a couple hours, which isn't too much
Not every blogger or eBayer has to register. If you're blogging but not gaining any income or as mentioned earlier, just reselling on eBay, you don't need to register. But once you have taken a payment from your blog, or something that you sold on eBay you bought specifically to sell, you want to go ahead and register for a self-assessment. You must have registered before 5th of October, after the end of the tax year, you need to declare a return for. So that means if you've made a bit of extra income between 6th April 2016 and 5th April 2017 the following year, then you must register before 5th of October 2017. You can register late, but you may face a fine as a penalty. You must then complete your self-assessment, and pay taxes owed by January 2015, so as you can see, you have a lot of time to get yourself sorted.
Here is a brilliant calculator for working out how much National Insurance and tax you need to pay out. It takes into account your self-employed and employed earnings. So for example, if you are earning £15,000 a year from your “proper” job and about £200 a month self-employed online, after tax and National Insurance, you will take home £148.08 of that extra £200 a month
To register, simply go here to the HMRC website and register your business as self-employed – don't be scared by the use of the title “business”, you can apply as an individual earning some extra money. Be sure to read through carefully and answer all the questions. Once you've registered you will receive your Unique Taxpayer Reference, which you can use to register to complete your self-assessments online. Once received, go here to the HMRC self-assessment home page and on the right-hand side and select “sign up for self-assessment online” and follow the process.
The site is a bit of a minefield, and not the easiest to get around. For starting out, make sure to check on their information page about Undeclared Income. If you do get stuck, they have a helpful free phone call centre, where someone is always on hand to help you out. The number is 0300 200 3310
HMRC can take the tax in two ways – you can either have your tax code from your main job changed, so that you're taxed through that, or you can opt to pay it yourself when the bill comes in. Personally, I prefer the second option, keeping the tax I owe away from my personal income.
Remember that you can offset most expenses that you have incurred, so for example, web hosting costs, or even petrol to boot sales where you've purchased items to sell on. I can strongly recommend using Google Drive/Google Docs to create a spreadsheet of all your income and outgoings related to earning extra income. This will help you to complete your self-assessment much more easily.
If you have any further questions then feel free to ask them in the comments. I'm no accountant, but if I can't help you then I'll try to steer you in the right direction.