Second Source of Income – Don’t Forget to Declare it.

Do you have a second income as well as being employed?

confidential-agreement_MkJpbLwdIt is quite common now-a-days to be employed in a PAYE job, but also to work for yourself, often not just for the money sake but due to the skills you have being in demand. However, people often don’t think they need to declare this income as part of their annual earning for tax to HMRC. And that’s where they are wrong.

You may not have to complete a tax return if the value is not very great (less than £2500), but HMRC need to know and  tax bill levied on you at 20%/40%/45% depending on your total income. It won’t give rise to national insurance, but may have an effect on student loan repayments.

The types of income that typical of this state are: consulting fees, private tuition, organising parties & events, personal training, beauty therapists, hairdressers, buying & selling goods online or at boot fairs/markets, the odd bit of wedding singing, speaker fees,  mini-cab driving (parents often feel like mini-cab drivers), odd-job person, sales of craft items etc. The list is endless. It really covers anything you are paid for in terms of services & goods that you are making a trade out of. As per a previous blog, it does not cover the odd bit of selling your private items at a car boot sale or online if it is a sale of your excess, but it would be covered it you purchased those items specifically for sale for a profit.

Scissors And Comb For A HairdresserLast year, HMRC launched the “second incomes campaign” for people to declare this type of income and to settle any unassessed and unpaid tax before HMRC catch up with them. As you are volunteering the information, penalties are much lower than if HMRC found out by any of their tools that they have. You just don’t know whose hair you may be washing, who is in the congregation at a wedding, who is listening to your speech at a conference. Things get round.

If this is making you feel guilty, then I am really sorry, but you need to get it sorted.  You will need to make a voluntary disclosure of income that has not been taxed and the year that the income relates to, make that disclosure and pay the resulting tax all within 4 months of starting the process.

Firstly you need to notify HMRC of the second income. To do this, you need to complete this form >>>> CLICK HERE <<<< Sometimes it does not open in Chrome and you end up using internet explorer.

Then comes the disclosure form (DO2) that can be found by >>>> CLICKING HERE <<<<   Again, seems to work best in internet explorer.

Although these are online forms to complete, from our experience, if you move off the webpage accidentally you have to start again, and to send the form off, you need to print, sign and then post. There is no ability to print the forms first to know what you need until you get to the relevant page, so it all has to be done in one fell swoop.

If in doubt, there is an HMRC helpline: Second Incomes Voluntary Disclosure Opportunity – 0300 123 0945 (and it is free).

 

 

 

 

Disclaimer

 The information contained in this document is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is provided or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

 

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