That is the dream, isn't it? Doing what you love and getting paid for it. Or not even doing anything and getting paid for that - even better! And that's exactly what passive income is - think along the lines of investing in a rental property (which makes money for you with a minimal effort put into it), or you know - blogging. There's many ways to create passive income streams as a blogger - through affiliate links, sponsorships, brand ambassadorship or online courses. One thing you do need to know though - no matter how little or how much effort you're putting into your income, it's taxable in this country (UK). So - does the taxman (or HM Revenue & Customs, if you like) know you're a blogger?
💰 Not all blogging is passive.
No, not all blogging gives you a passive income. But pretty much all income is taxable. If your income is passive, I get it - it might not be that obvious that you need to be paying taxes. Those affiliate links you've attached to a Pin 6 months ago that are slowly dripping pennies into your account might not seem like a big deal but hey, money is money. And the government wants to know about it - and wants to have some of it (nosey greedy bastards, aren't they!).
💰I'm a blogger. What do I need to do to sort my taxes out then, or to be legal so to speak?
There's been a lot written on the topic of blogs & taxes so I won't go into depth (I've linked the best resources below for you) but the key thing you need to do right now (if you haven't done it yet) is to register as a self-employed (do it here). You just follow the instructions on the screen that will take you through the whole process fairly easily (including setting up a PAYE). Just remember to have a passport and some other ID on hand as they will need to verify your identification (no one tells you this but you also need a smartphone because they ask you to take a selfie to match it with your ID photo - 21st century or what!). You will get a few confirmation letters through the post and a few e-mails with reference numbers you will never remember (so write them down, yeh). You're self-employed.
💰 What's next? The Self-Assessement.
From today you will have to carefully file all your invoices, all your receipts, all your POs, all your affiliate receipts, all your train tickets, basically your whole life. Come next January you will need it (and you will wish you had done a better job at filing). The Self-Assessment needs to be completed by the 31st January of the following year.
💰 Is there anything that can make my life easier?
I'm glad you've asked. There is. From 2018 we all will be filing our taxes digitally (that will be the law, not an option) so to have a head start you can sign up to Go Simple Tax here. It's an online platform (read a giant filing cabinet with its own brain) that will allow you to upload all your documents (invoices, receipts etc) and then will do all the work for you. It's pretty snazzy to use - not only that it automatically calculates your tax returns but it also gives you all your expense exemptions which you can claim (if you're using your home as an office you can claim a proportion of your heating bills etc - no chocolate chip cookies & breakfast sausage baps don't fall under this, sorry). They have also recently launched an app which makes it about 32470321 times easier because you can scan your receipts on it and literally do everything on the go. Plus they also submit the tax returns for you which is a life saver (the HMCR website is a horror). And you know how much all this costs? £18. Essentially all your filing is for free (unless you sign up for a bookkeeping website to link it with which does make it easier but not necessary if you don't get 53 receipts/invoices a month) & then the submission to HMCR is £18. Boom!
💰 Where can I learn more about blogging & taxes?
As I've already mentioned a lot has been written about blogging & taxes including what is taxable and what isn't (let's talk the hot topic of PR samples some other day, shall we?), what expenditure to claim against (spray paints for your DIY, blog hosting, Photoshop...) and much more. Here's some of my favourite posts & videos:
Back to Blog School: What you need to know about Blogging and Tax - read it here
Everything you need to know about blogging, taxes & HMCR - read it here
The truth about tax & blogging - read it here
A comprehensive guide to blogging and tax - read it here
Does the taxman know about your blog? - read it here
Jargon Busting - watch it here
Making Tax Digital - watch it here
I hope you've found this post helpful and if you did then please share it with your bloggy friends!
FollowJargon Busting - watch it here
Making Tax Digital - watch it here
Why you should Go SimpleTax instead of www.hmrc.gov.uk - read it here
If you fancy chatting more about blogging & taxes, have any good tips you'd like to share or any questions that are keeping you awake at night head over to Blogstart on Facebook. A group I've created where bloggers help bloggers grow! Click here to join!
I hope you've found this post helpful and if you did then please share it with your bloggy friends!
Sharing is caring and all that!
💠This post is in collaboration with Go Simple Tax however the struggle from filing all my receipts & expenses is my own - and very real. Go Simple Tax makes it dead easy and migraine-free so I'm more than pleased to be able to recommend their magical tax services.