Today I had an idea for a website that might be worth monetising. Nothing I could give up my day job for, but something that might bring in a few tens of pounds pocket money from Google Adsense. It would be fun; it might help fund my gadget habit. But:
Despite what you may have read somewhere on the Internet, any income earned from Google Adsense is taxable income. It makes no difference whether you earn £5 or £10,000 – this money must be declared to the Inland Revenue as income derived from self employment. Moreover, you must declare yourself as self employed as soon as you start work (this could be when you begin that new website or insert Google Adsense into a personal blog).
Says Her Majesty’s Revenue and Customs:
If you’re self-employed on a temporary or part-time basis you must register for business taxes with HM Revenue & Customs (HMRC) as soon as you start work. You’ll have to complete a Self Assessment tax return and are responsible for paying your own tax and National Insurance contributions on the income you earn.
Even if you don’t think you’ll earn enough to need to pay tax, you still need to complete a tax return.
Right now I pay my tax on Pay As You Earn, meaning my employer employs a department of people to do all the form filling. I like it that way. I have a very strong aversion to filling in official forms. When forced to do so my heart rate increases, I start to sweat, I hyperventilate, my writing hand cramps up, I have a stong urge to shout and throw things and people around me get nervous. This is partly indignation at being made to do something I do not want to do, partly the unease of spending time doing something that is not pleasant and not what I am skilled at (if I was good at organising paperwork and form filling I would have made different career choices), and partly irrational. And I can never find the damned supporting documents no matter how organised I have tried to be. I could elaborate yet further but thinking about it now is starting to induce symptoms so I must end this paragraph soon. The point is: the rewards would have to be very high to overcome this aversion, or I would have to make enough to pay someone else to do it for me.
What is the cost to society of all the little side projects, hobbies and micro-businesses that do not get started because it is not worth the bureaucratic hassle?
Update: I found some tax examples graciously provided by HRMC. I particularly enjoyed the phrase “air of commerciality”. No grey areas here, then.