UK Tax Laws - Google Adsense Affiliate Programs

UK TAX LAWS - Websites, Bloggers, Affiliate Programs, Advertising, Selling Online.

You have to declare yourself as self employed if you are making websites on the internet and using them for making money through advertising or in any other way. If you are already in employment and work for a company then you will still have to register yourself - Your status will then become "Employed and Self Employed". You must do this regardless of how much money you are earning through your blogs.

Income Tax

Therefore this means that you do pay Income tax on earnings coming through google adsense or any other affiliate program - E.g. Ebay, Amazon. And you do have to declare your earnings. Therefore it is important to keep accounts of your earnings, and receipts of relevance once you start blogging. Some people get an accountant to look after the tax side of things, but you need to see if it will be worth your while, as earnings are not always high through affiliate programs.

If you have no other form of Income and work self employed as a blogger only, then you will not pay tax on any earnings below £5,000 profit. If you earn above then you will need to fill out a self assessment form in April to review how much tax you should pay.

If you are "employed and self employed" and you already earn over £5,000 in your employed job, then you will be required to pay tax on any earnings made from affiliate programs. However if you earn less than £5000 on your employed work, then you will only start paying income tax on what you earn that goes above £5000 altogether.

You should contact HM Revenue & Customs to make them aware immediately of any self employed work that you are doing on the internet. They will send you a self employment pack and can offer you a half day workshop, where you can learn how to fill in a self assessment form.

Class 2 Contributions (National Insurance Contributions)

If self employed then you will also have to pay to Class 2 contributions. These count towards:

  • Incapacity benefit / Employment and Support Allowance
  • Basic State Pension
  • Bereavement Benefits
  • Maternity Allowance

If you are over 16 and you are self employed then you must pay a weekly contribution to class 2. Currently this contribution is £2.40 per week. However there are some exceptions:

  • You are a pensioner - Over 65 for a man, and 60 for a woman.
  • You have applied for and been successful for a certificate of small earnings exception, which means are exempt from paying Class 2 tax for the year.

If you are Employed and Self Employed, then you should only pay Class 2 Contributions once you self employment is earning over £4,825 from April to April. If you expect to earn below this amount then you should apply for exemption from class 2 tax. You can phone HM Revenue & Customs and they will send you an application form to make yourself exempt.

 

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Comments 26 comments

Edina 6 years ago

That was a very useful information thanks!


search engine guide 6 years ago

Thanks for posting there are many different things to learn on this subject, im happy to have come across your information


OZKAN 6 years ago

Thank you very much for your help in this matter..it was exactly what i needed to learn.god bless you my friend.


Darren 6 years ago

Hi,

I live in Turkey and have affiliate income and Google Adsense income from my website. Can I still pay my income from internet in UK while living out here as I don't have UK address anymore?

Also, do I need a commercial account or just a current account is good enough for adsense income?

Thank you


Terryandco profile image

Terryandco 6 years ago Author

Hi Darren,

Not 100% sure what you mean. If you are asking whether you can still be paid then yes I believe so. If you are being paid via internet and not cheque then I do not see why you would have a problem. However, not all countries can be paid by these means (internet transfer), so it is worth checking on adsense.com. However if you still have a UK bank account then you can have the money paid into there - and I don't see why it would be a problem.

If you are being paid into a UK bank account then my guess would be that you do still have to pay income tax which can be done online. Whether you can still do this from Turkey - I honestly have no idea. Perhaps you should ring Inland Revenue and ask them what the situation is.

With regards to bank accounts - I use a current account and have found this more than sufficient. If you use a business account then you are usually paying to have it..but you do get certain benefits for it. It's a personal choice and I guess it comes down to how much money you are making!


Darren 6 years ago

Hi Terryandco,

Thank you for your quick reply. I think you are the only person who has given a good answer to my situation.

I think I am going to just give my address abroad to Inland Revenue and ask them to send me a Self Assesment form at the end of year. Here, I can add all the copies of affiliate income, adsense income etc and send it back to them. Lets see what happens.

I think, I don't need register a business of any kind, am I right? I can just do this as income tax? Because if I open a business in UK, I need to be resident there.

God, its confusing...:)

Thanks for your help again.It is much appreciated. I hope I explained the situation better this time.


Terryandco profile image

Terryandco 6 years ago Author

Hi again,

You should just ring them and tell them what you are doing. You will then be classed as self employed. If you have a job as well as doing affiliates then your status would become "Employed and Self Employed". I agree it does get a little bit confusing, I am yet to send any tax returns back myself as only started doing this 7 months ago! But i have been on a couple of the hm revenue courses. You don't need to register as a business with the bank, just use your current account! Any other questions let me know...


mike 6 years ago

if i dont declare whats gonna happen? i am employed in a company and paying tax. now if i earn from adsense , the money goes to bank. how the hm revinew knows that i am earning? if i dont simply declare that earning then what?


Terryandco profile image

Terryandco 6 years ago Author

The HM revue do not necessarily know what you are earning, but they can do random checks on your bank account without you even knowing. Also, who is to say that google do not provide them with their affiliate users names? etc etc. You could go on for years and not get noticed, and i am sure that many people do much much worse, but its a risk you take. At least if you do declare it then you will have ease of mind - but then again I depend it comes down to how much you are earning. If its 10p a day then maybe not worth bothering. Its if £10 a day then it might be! hope that helped..


Peter 6 years ago

Hi, I'm in a strange situation.

I live overseas in the Philippines, but I'm a citizen of UK.. since I've been away 2 years from the UK, I believe I'm registered as a non-residing citizen at the moment, since i've not paid any UK income tax for 2 years.

How would this work out on registering for tax.. would I have to register here in the Philipines as a business (which would require a change of visa status), or could I register it to my UK address as self employed, or would this be impossible because of being outside the UK?

To complicate things even more, my income would be put in a bank account registered to my UK address.

Any ideas what to do, or should I just contact the inland revenue for info about it??


Tom 6 years ago

Thanks for the article. This is the info I was after.

So is it enough to got to the taxoffice once I received the first cheque? If I just earn a few pounds, do I still have to go and report it?


Terryandco profile image

Terryandco 6 years ago Author

Hi Tom,

Pleased that you liked the info..Its totally up to you. I decided to hold my payments untill I was actually earning enough to consider going to the tax man. I never received a penny without registering myself first though.

Terry


Rajesh 5 years ago

Hi,

I am student came from India to UK. Presently studying in UK.I am doing adsense with UK address where i presently live. and the amount gets deposited in my UK bank account. DO i need to Pay the tax?..In few months my course will be completed and i would leave UK.even then my adsense earnings will be deposited in UK bank account. Do i need to pay tax even when i am not in UK.

Pls give some advice.

whom should i contact if i have to ?

when i transfer the amount to my bank account in India ..i have to pay tax there again.

IF i need to pay tax both in UK and in INDIA i would'nt be left with any earnings.


Terryandco profile image

Terryandco 5 years ago Author

Hi Rajesh,

The answer is Yes you do have to pay it whether you live in UK or India. It is 20% of your earnings that they will take but you can try to claim some back through expenses etc.

You need to contact HM Revenue who will give you a self employed classification.


Carlos 5 years ago

This was very very useful. I have a simple question, say I host my domain from which I have the adsense (earning a few pence a week ... so I will not be cashing in a while) abroad, can I count that as "expenses"? Would a paypal transfer be used for that purpose? Or would I need a formal receipt from the hosting company?


The Jaywalker 5 years ago

Very nice info...I was looking for something like this for the last several days

Just to reiterate: I have recently arrived in the UK and looking for permanent job---since I haven't found one yet, I took up some blogging/ freelancing work via the Internet and earned a few pounds. Now since it's less than 5000, I don't need to do anything in terms of taxation, right?

Also, I am deducing that there is nothing wrong with running a Google adsense site, doing freelancing work via the Internet (e.g., via odesk.com or vworker.com), in addition to one's full time day job. Am I right that there are no legal considerations here?


Terryandco profile image

Terryandco 5 years ago Author

As long as you are not earning over 5 thousand pounds in your self employment (hubs etc) then you do not need to pay national insurance but you still need to tell HM Revenue and pay 20% tax.


Damien 5 years ago

Just the kind of information I was looking for thankyou! I do have a few questions though. Did you have to tell your employer about it and does applying for self-employed status affect your main income tax code? What did you put down in the "name of business box" when applying?


ely 4 years ago

Hi

I am going to have my own blog,I suppose and hope that I will earn some money.Should I declare self employer, if yes,when should I do?


dean 4 years ago

hi we are starting a cleaning business jointly so do we both have to pay ni contributions 2 and if we was earning 100 pounds a wk do we have to do a self assesment form does anyone no thanks.


geek_princess profile image

geek_princess 4 years ago from Haywards Heath

Thanks for this - the whole tax situation is the main reason I haven't put my whole heart and soul into an online business really...so confusing, especially when we pay so much tax on our main jobs!

I once spoke to a bookkeeper who told me you can pay tax on secondary earnings without declaring yourself as self employed, as long as the money coming in is not regular - she said you do this by just filling in a tax return in April. I don't know how true this is though?

I mean, if the payments are not regular and dotted through the year (in the way that Hubpages can be), is it technically a job as such? What makes it any different from the occasional sale on Ebay?


Bobski606 profile image

Bobski606 4 years ago from U.K

This is brilliant thank you so much for sharing this. I have been searching around for a few weeks trying to find this information and just by accident stumbled across you hub. Thanks again!


Flynn 3 years ago

I like the information that you've put up onto your website, it was very useful. I was hoping I didn't have to pay any tax, but it was still good to know before I done it. I don't know why we give government our money, I never see any good differences anyway lol


krs 3 years ago

Jesus Christ, so important those taxes but somebody forgot about this subject in school. I have question if tax in second country belongs to expenses?


daydreams profile image

daydreams 3 years ago from Scotland, UK

I am not sure this advice is completely accurate - I think you can declare the income to HMRC without being registered as self employed - as it isn't necessarily running a business.

Also the thresholds have changed since this article was written. (thought I should mention that as it is coming up near the top of google).


Rose Kim profile image

Rose Kim 23 months ago from England

Hi, thank you for the advice, I am just starting with Hub pages and I want to join the ad program but one of the requirement is to have tax details. I don't know what to do because I can't register with inland revenue as self employed because I have not yet earned anything, I am just trying to start up. I have a website and have Google adsense, but even that one I haven't earned anything yet . What should I do?

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