New Disclosure Campaign Announced
I have a full time job as a secretary in a local business but in my spare time I like to bake. I usually just bake for friends and family but occasionally I sell what I bake at local fairs and markets. Am I subject to tax on this income?
Most employees are fully taxed through their employer’s PAYE scheme. However, given that your second income stream is separate from your employment you may need to disclose this income to HMRC on a tax return to ensure that you are paying the correct amount of tax. HM Revenue & Customs may deem this hobby to be a ‘trade’, depending on your circumstances.
HMRC have recently launched their “Second Incomes Campaign”. This is an opportunity for individuals to bring their tax affairs up to date if they have additional income that is not taxed through their main job. As with previous HMRC campaigns, once the campaign closes HMRC will use the information in their possession to identify individuals who they believe have something to disclose but who have failed to take advantage of the special disclosure opportunity which is being offered.
You can take advantage of this campaign if you’re an employee, are resident in UK and have additional income from working for yourself. Typical examples will be those who have a second occupation such as consultancy, hairdressing, taxi driving or providing fitness training and those for whom a hobby has developed into a business, for example, making and selling craft items or trading via eBay.
To take advantage of the Campaign you will have to complete a notification form, which you will find on HMRC website. You will then have four months from the date on which HMRC acknowledge your initial notification to complete and submit your disclosure form.
If you make a full voluntary disclosure and this is accepted by HMRC, you will generally benefit from reduced penalties under the second income campaign. If you are not in a position to settle your liability in full, HMRC will also give you an opportunity to negotiate a payment plan.
You should speak to a tax adviser before you disclose through the Second Income Campaign as there may be a more appropriate disclosure for your circumstances.
The advice above is specific to the facts surrounding the questions posed. Neither PKF-FPM nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
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