Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Wed, 01 Mar 2023 13:56:44 GMT by Javert24601
Hello I am a full-time employee and would like to do some analytical work on the side which would earn me beyond the 1k gbp threshold, so I would like register as self-employed with HMRC. I have couple of questions that I couldn't really get answers to online (or rather couldn't fully apprehend). Thanks beforehand for helping me out. 1. If I earn yearly, say 5000 GBP and work from home on my laptop, can I claim the 1000 gbp trading allowance? Meaning this would be the total of expenses made when I work out the yearly profit to pay my income tax/NI from. Correct? 2. If the above is correct, I would not pay any NI because the profit of 4k is below 11,908 gbp. 3. Then I would pay 800 gbp tax on the 4000 gbp as the personal allowance is used in my fulltime job. Since I plan to have EU customers, I wonder how to do the invoices and accounting: 4. Say I have a customer in the Czech Republic and I wish to charge them in CZK, let's imagine 10 000 CZK. I understand I need to get GBP as a UK trader and would use Revolut or Wise business account to do this. Should I issue an invoice for 10k CZK to the customer and provide them with a link to do the payment which would convert it to GBP? It is desirable the customer knows the price in their currency and I bear the disadvantages of the sterling conversion. 5. If above is correct and I would use cash basis accounting, would I record the income of the GBP that I actually receive after the conversion via Revolut or Wise? Thanks!
Posted Fri, 03 Mar 2023 14:27:32 GMT by HMRC Admin 30
Hi, 

1. Yes you can claim the £1000 trading allowance if not claiming any other allowances.   2. No NI would be due.   3. Tax would be at 20% on any profit if you are a basic rate taxpayer.  4. We cannot advise you on how to do your invoices and accounting. you must however declare the income in sterling.   5. That is correct

Thank you.
Posted Sun, 27 Aug 2023 18:55:29 GMT by
Dear HMRC Admin Team, I am an online content creator and I operate across various platforms based in the USA. On a monthly basis, these platforms transfer the earnings to my bank account, and quite interestingly, these platforms do not require me to submit invoices; instead, they actually provide a monthly invoice relative to payments they disburse to me. This prompts the following question: As a sole trader, would it suffice to record the income received from these platforms on a month-to-month basis and declare it on my tax return without the need to issue any invoices? Or, is it advisable to issue invoices to the platforms even if they do not demand them? Thanks in advance for your guidance on this matter. Sincerely, 

Name removed admin .
Posted Fri, 01 Sep 2023 12:37:24 GMT by HMRC Admin 20
Hi LeriJam,

This is not for HMRC to answer as this is your choice. As long as you have evidence to support income/expenses should they be required it is up to you.

Thank you.
Posted Tue, 26 Dec 2023 19:05:19 GMT by Javert24601
Hello, thank you for your help is your previous reply. I would have two more questions please: 1) As an employee I earn around 21,000 p.a. and as self-employed I assume to earn in 2024 about 7000 gbp. For the purposes of NIC in my self-employment, I understand I will not be liable to pay NIC Class 2 and 4 but will be treated as paying them. This is in part because incomes for the Class 2 and 4 from employment and self-employment are "not merged" for the calculation and are treated separately and because I will be between the Small Profits Threshold and the Lower Profits Limit. Is this right? In terms of income tax, however, the incomes are "merged" so that correct tax band is figured out right? 2) If I am charging my customers in CZK or any other foreign currency and use cash based accounting, for my records and due to the requirement to track all transactions in GBP, am I required to use a specific exchange rate, such as those from Bank of England on the day I receive the money in CZK? Thanks!
Posted Mon, 08 Jan 2024 13:09:57 GMT by HMRC Admin 5
Hi Javert24601

Any class 2/4 would be adjusted based on the class1 paid via your PAYE employment.
You can use any of the spot rates for the tax year from HMRC currency exchange average rates - GOV.UK (Trade Tariff: look up commodity codes, duty and VAT rates)  for the exchange rates.

Thank you
Posted Fri, 12 Jan 2024 13:42:30 GMT by Javert24601
Hi, 1) I understand but I don’t think that fully answers my question. In cases of rather low income, the calculation is separate isn’t it? Please see the example I gave you above. In fact, is there any calculator or app I can use to see the NICs based on earning from both employment and self-employment? Or any other material? 2) How can I find the exchange rates on the website you provided?
Posted Wed, 17 Jan 2024 10:35:34 GMT by HMRC Admin 20
Hi Javert24601,
Please refer to National Insurance rates and categories.
For the exchange rate, refer to the link previously given and select the time period you require for the rate to be given.
Thank you.
Posted Wed, 07 Feb 2024 12:47:49 GMT by Javert24601
Hi, I’m afraid I am not looking for tariffs information as my services are online research/ consultancy. So there’s no goods code I can look up. Essentially I need to know if when I recieve money in foreign currency that’s creditted to my account in the foreign currency, how (according to which official fx rate) to convert it to gbp and whther to do it on the day of receiving the funds or when I actually convert them (eg even days later). Thanks
Posted Tue, 13 Feb 2024 09:47:49 GMT by HMRC Admin 21
Hi Javert24601
You can use any of the exchange rates from within the same tax year.  
Please refer to HMRC currency exchange average rates - GOV.UK (trade-tariff.service.gov.uk).
Thank you.

 

You must be signed in to post in this forum.