Hi, I've recently created a number of Android apps that are available through the Google Play market place. Some are free with Ads displayed in them whilst others are available for a small fee. My question is what tax liability do I have for the income I receive on these? I'm currently in full time employment and these apps are purely a hobby thing making currently around £60 a month so not a fortune. Firstly do I need to pay tax on this income and if so should I be registering this as a business or just declaring this on a self assessment? Thanks in advance and apologies if this is not the place for me to ask this. Regards, Leighton.
regardless of the low level of profit the intention in this instance is for profit so this is not simply a by product of hobby.
You must inform HMRC within six months of the end of the tax year in which you started trading or face a fine.
The additional income will mean that you move onto self assessment where you will need to pay a balancing charge before 31st Jan 2014 on your income from the hobby up to 06/04/13.
As your earnings from the hobby are minimal you will need to elect not to pay Class 2 or Class 4 NI contributions. (Opting out of payment is not automatic).
Here is a good starting point to read up on tax and NI for the self employed :
I know that this all seems like a lot of bother when it is very unlikely that you will end up paying any additional tax or NI... Problem is that get it wrong and they will hit you with penalties which are not at all linked to turnover so you could (although unlikely) end up paying more in fines than you earn!
Note that the HMRC approach is that ignorance of the rules is no defence... Of course, as beneficiaries of any mistakes by the taxpayer they would of course think in that way.
kind regards,
Shaun.
p.s. Seanxie, sorry, advertisments and links to websites are not allowed in signatures until you have proven to the site by way of relevant and helpful postings that you are a bookkeeper, accountant or someone in a related industry such as Payroll software or accountancy training.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
