The truth is that these extra tax implications can be minefield field to work out yourself.
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Fortunately you now have this guide to help you identify when you have tax on your money making schemes, how much you might have to pay and when you might have to pay it. In the UK everyone is entitled to earn a certainly level of tax free income.
Making extra money - do I have to pay extra tax?
The amount varies depending on when you were born, and usually increase slightly every year. You can find out more about Personal Tax Allowances on the HMRC website.
If your only income is from activities such as buying and selling on eBay, blogging, babysitting, gardening etc.
PriorTax | Prepare and file your current and prior year taxes online
Many of us are familiar with auction sites such as eBay and often use them to get rid of old junk or free up cash in old possessions. The tax rule here is actually quite simple. Cash in the attic so to speak is not taxable.
If you are buying goods to sell on eBay for a profit, than that income is taxable and should be declared to HMRC. This is so HMRC can send you a tax return to fill out to ensure you pay the correct amount. You need to consider capital gains tax CGT when selling any item s you own that have increased in value since you purchased them.
For example antique jewellery, or works of art. Should you exceed your personal CGT allowance in any given year, you only pay CGT on the excess.
Note that CGT does not apply to equally to all items some items such as cars, are exempt. Others such as your main home are liable for GCT but usually qualify for relief.
For more information on CGT see the HMRC website. Renting out your second home, your driveway, or even room in your main home are all great ways of boosting your income, but you should be aware that rent is always taxable regardless of your personal allowance.
The good news here is that again there is sort of personal allowance. Note that this does not apply to renting out the whole house, driveway, or anything else. This all stems from a decision taken by HMRC back in May Then HMRC stated that it intended to start taxing loyalty bonuses paid on investment funds.
However, HRMC has dismissed this as nonsense stating:.
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More often than not the taxman is right, but there are occasions, especially with students or those working two jobs, where you end up being taxed more than you should.
Alternatively you can write a letter, to the same address explaining what has happened. If this is the case, then you can make things easier on yourself by contacting HMRC and changing your tax code to take into account your extra earnings. If your earnings fluctuate too much from month to month you could end up payment too much tax, or worse, paying too little.
See here for more details.
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