Hi everyone, I came across this forum through some Googling and wondered if you could help me... I'm currently living in Spain and working as a self-employed English teacher, but will be moving back to the UK in December. Some of my students here would like to continue having lessons via Skype, and this is where my questions come in:
1) I'll register as self-employed once I'm back in the UK so will need to invoice these students. However, they pay me in Euros at a fixed Euro price, so what currency should the invoice be in? If in GBP, what exchange rate do I use?
2) PayPal will charge me fees so the money I actually receive from them will be less than what they pay me. Do I need to reflect that in the invoice? PayPal will then convert the money to GBP, so what actually goes into my account will be minus charges and converted at PayPal's rate.
I hope I've posted this in the right place and that my questions make sense...
Thanks for your reply. The PayPal invoicing option certainly looks nice and easy to use :) It also seems that the invoices don't have to be consecutive numbers - I'll also be creating invoices in GBP using Excel for new clients in the UK. Is it acceptable when submitting my UK tax return to have invoices in ?
My second question is about the fees that PayPal retains for a transaction from Europe, which are 3.4% of the total. This means that if I invoice 200, I'll actually receive less than that. How do I reflect that in my tax return?
I usually use the transfer of each income to the GBP bank account, from Paypal, to work out the ex rate I got. This then allows me to work out the Euro fee in GBP, and I add this back to the net received at the bank, to get my sales figure.
So lets say I invoice 110 euro and get a 10 fee deducted... 100 euro is due to me, and when I transfer it to GBP account, it comes in as £79
100 euros = £79
1 euro = 0.79
the 10 euro fee must be £7.90
£7.90 plus £79 is £86.90
sales = £86.90
fees = £7.90
Profit = £79.00
-- Edited by FoxAccountancyServices on Thursday 13th of November 2014 08:22:42 PM
If you're self-employed in the UK, then you should supply your invoices with GBP on it. It should make your life easier, unless you want to be paid in euros, but in any case your income details for Income tax in the UK will need to be stated in Sterlings to HMRC.
Invoicing in GBP will make your life a lot easier when preparing your self-assessment return.
Hello and Happy New Year! Sorted back in the UK now so had time to look at this :)
Sorry Fox, I missed out a key word, so it should have read: "Do you put the amount in Euros and GBP on the invoices?" However, I think richard2013 has now answered my question - thank you very much! EDIT: realised the problem is that if I use the Euro symbol on my keyboard, it doesn't show up in my posts here!
I received my first PayPal payment today. The student paid me in Euros, but I was obviously able to convert that to GBP to receive it from PayPal. My issue now is that, whereas the amount was a round number in Euros, so I could write "English lessons @ 20 Euros per hour" on the invoice, the amount in GBP isn't a round number. Do I have to break the invoice down into an amount per hour, or can I just put the total? Does that make sense?!
Also, I understand that I can claim the PayPal fee as an expense. That was taken in Euros, but presumably I can use today's exchange rate?
-- Edited by Borboleta on Monday 5th of January 2015 05:38:36 PM
-- Edited by Borboleta on Monday 5th of January 2015 05:39:46 PM
You can use the total, no need to break it down to hourly.
Income wise, you will need to record the figure in GBP before paypal fees are deducted, then work out the paypal figure. Ensure that the two balance to the net figure received from paypal.
Thanks John. Think I've got it - the amount on the invoice needs to be the GBP amount including the PayPal fee, which I've worked out using PayPal's exchange rate. I can then claim the PayPal fee as an expense - presumably a printout of the PayPal transaction proves this?
One more question if you don't mind... As I mentioned in my first post, I was self-employed in Spain until December 2014 and these PayPal payments are from students who are continuing their lessons via Skype. I used the same business name over there that I'll be using here, but I presume that because it's a completely separate tax system, I should start my invoice numbers from 1 again?
I used a "gestor" (there isn't an exact equivalent here, but basically an accountant) to set me up as self-employed over there as when we first moved my Spanish wasn't good enough and in any case, the bureaucracy is quite tricky!
Once you're registered, you have to pay a fixed amount to social security regardless of your income. In my case, because I got a discount for being under 30 and it was my first time signing up, it was about 180 Euros a month. This is separate to taxes. The tax paperwork is completed every quarter and taxes are taken from your account on about the 20th of the following month. You (or your gestor) then have to submit a declaration in about July (the Spanish tax year is the same as a calendar year) and you then either have to pay more or you receive a refund.
Hope that helps - if you have any other questions, I'll do my best to help :)
Thanks for your wishes - enjoying being back but missing the sunshine!
Thanks ever so much. I bet you are missing the sunshine. My hubbys dream is eventually to move to spain hence the interest, as to the differences in self employment. I wish you every success. Where abouts in spain were you. Is it a lot different to the UK apart from the nice weather and the beaches etc?
Hi Lainy,
We were in Barcelona. Really great place to be - beautiful architecture, the sea, mountains, nice food... :) It's not very "Spanish" as a lot of people would like Catalonia to become independent.
I would say Spain is a great place to live as long as you either have work or don't need to work. To become a resident of Spain, you have to prove that you can support yourself financially.
As I said before, being self-employed is expensive, but as long as you know that from the beginning it won't come as a shock.
Take care :)
Hi again! Just want to make sure I've got this right... My student paid me 200 Euros. PayPal then took a fee of 7.15 Euros, so I received 192.85 Euros, which PayPal converts to 146.68 GBP. If my (bad) maths is correct, this means that the PayPal fee was 5.44 GBP. I need to make an invoice, and if I've understood correctly, the amount on there should be 152.12 GBP. I then print out proof of the PayPal fee and add it to my expenses. Is that right? Help and corrections welcome :)
ETA: Can the invoice description literally just say "English lessons January - Feb 2015" and the total amount?
-- Edited by Borboleta on Tuesday 13th of January 2015 06:34:50 PM
Hi again! Just want to make sure I've got this right... My student paid me 200 Euros. PayPal then took a fee of 7.15 Euros, so I received 192.85 Euros, which PayPal converts to 146.68 GBP. If my (bad) maths is correct, this means that the PayPal fee was 5.44 GBP. I need to make an invoice, and if I've understood correctly, the amount on there should be 152.12 GBP. I then print out proof of the PayPal fee and add it to my expenses. Is that right? Help and corrections welcome :)
ETA: Can the invoice description literally just say "English lessons January - Feb 2015" and the total amount?
-- Edited by Borboleta on Tuesday 13th of January 2015 06:34:50 PM
Yep you've got it right, and I've just arrived at the same GBP figure as you. If you're invoicing in euros's write on your copy £152.12 and record it as income in your accounts. If you're invoicing in GBP I would just write on it 200 euros. Yes to the ETA question.
Thank you so much John :) Glad to hear my maths isn't as bad as I thought!
My student doesn't need a copy of the invoice, so is there any need to put the Euros figure on there?
Many thanks again!
