side hustle and tax (UK)

[kerry19834]

This query is more theoretical at the moment, but I have created some print to order books, I have had them listed on amazon for a couple of months and unbelievably I actually made a couple of sales.

Question when it comes to tax, I know there is a £1000 trading allowance for side hustle in the UK. I have a main job, but also earn a bit from walking a dog etc.

I don’t think the book sales will go far but in case they do. When it means trading allowance, is this the profit I make or the total value of the books sold.

Obviously I make a tiny amount on the book sales only a couple of pounds per book. But in terms of total sales each is 14.99.

So in my trading allowance do I count the 14.99 or the 2 (keeping fingers simple).

Obviously with uploading a digital copy and print to order I don;t have costs until the book is sold.

Count the £14.99
Its a trading allowance on turnover

If you exceed £1000 on the total of everything then you would need to register for self assessment, the questions linked below would tell you if you need to register
Assuming you do then it does not mean you have to pay tax, you would subsequently be able to do a return taking into account related expenses before calculating the profit

www.gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms

Work out how much your turnover is (not profits) is it over £1000? If so you need to put it on your tax return. When you do put it on your tax return you have two options either deduct your actual allowable expenses or deduct £1000 obviously you choose whichever is higher. If you deduct your actual allowable expenses make sure you have as much evidence of these as possible eg receipts etc as HMRC can ask for them (doesn't happen that often).

thanks, is that the case even though amazon technically says they pay me a royalty through kdp for my book

I disagree. The £14.99 is Amazon’s turnover. The OP will only ever receive a commission or royalty, and so that’s her turnover.

That will depend on the technicality as to the accounting.
If you are only paid the net royalty then that lower amount is the figure for your calculations

If Amazon are turning over £14.99 and paying you £2 then your pre-expense income is £2
If you are turning over £14.99 and then pay Amazon £12.99 then your pre-expense income is £14.99

As you have now described it, I would say the lower

For my eBay sales I report the income figure with eBay fees deducted*, as that is the amount paid to me

*though sales fees are charged to the buyer now, I do have fees such as promotional advertising fees

In my case it’s a moot point because I’m over the trading allowance, so it’s a matter of whether I show a net figure or a gross total with a deduction in another box. Previously I would go by trading allowance and didn’t have to submit a return, then when I had the odd big sale in a year would slow things down to keep low
The ‘benefit’ of accounting rather than trading allowance is the types of expenses I can deduct

It looks like this is increasing from next April to £3000

I have a similar set up and used to report to HMRC the net after the retailer fee is deducted as my income and based by return on that. HMRC contacted me for a review and told me they wanted it reported the other way. So the total value of the sale with the retailer cut being classed as an expense. This was so the value I reported matched the value the retailer reported to HMRC against my name.

Yes

Yeah, this is the correct way to do it.

Report the £14.99 and then the £12.99 is an expense.

Also, incase it's relevant, there is no allowance if you're on UC - you have to register as self-employed and declare income/expenses to them immediately.

£1000 is on simple turnover so that you don't have to justify expenses on tiny earnings.

If turnover exceeds £1000 you can just pay simple income tax on the excess over £1000 of your whole turnover. Or you can start doing proper accounting.

So in your case if each turnover of £15 gives you £2 of actual income the tipping point for when it becomes worth doing proper accounts would be once you are selling about 77 books a year - at that point the 20% tax on all turnover over £1000 starts to exceed the tax you'd pay if you were doing accounts and subtracting costs. This tipping point is only valid if you can do your own accounts though. If you have to pay £200 for your accounts to be prepared then the tipping point at which you start saving money doesn't come till you are selling about 154 books a year.

Correct

https://www.gov.uk/government/publications/income-tax-increasing-the-trading-allowance/increasing-the-trading-allowance

Currently the allowance is £1000, and from April 2027 it will be £3000

If you are within £1000 (gross) this year, and subsequently £3000 next year then unless there are other factors it is not necessary to register for self assessment

If you are already registered (or have other reasons requiring self assessment) then you have the choice of either :
ticking the box to use the trading allowance
completing a fuller return breaking down income & expenses

It’s swings and roundabouts - a nice simple box or the potential of deducting suitable expenses
(For my first year of self assessment the HMRC calculation gave me a small tax rebate)

Always keep your own background records in case you either go above the threshold or if HMRC decide to contact you

So what happens if you get the standard letter from HMRC now after selling over 30 items [a mix of personal selling and reselling flips], but the total sales value is under £1000?

The 30 items is a trigger point for online marketplaces to notify HMRC of you. It does not mean that you are taxable for them.

Do what the letter tells you - and check the timeframe to respond

I assume that you have been notified due to the 30 item trigger, and HMRC are asking you about your sales. Read it carefully and reply accordingly
I also assume that as a mix of personal & trading plus the combined total is below the trading allowance threshold (therefore your trading will be well below) that they won’t be requiring you to submit a return

If HMRC tells you that you must register for self assessment then you must register and submit a tax return, but you can tick the trading allowance box for your TRADED items. Your personal items sold are not taxable (unless it becomes capital gains etc )

www.gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms?utm_source=hmrc_news&utm_medium=referral&utm_campaign=onlinesellers

@ItsOnlyMee1 Note - I am not a tax expert
Just someone who has needed to go through the process themselves