Tax Advice for the UK needed

Hi Guys

From the UK but i work remotely in Asia, my main source of income goes through to my paypal account.

Do I need to declare even though in not working in the UK?

If so, any advice on how to get around not paying tax? Im a freelancer and dont own a registered business.

Does paypal send a report to HMRC at the end of tax year also?

Thanks

To answer to your question I must know where do you move your money out of your paypal account.
If you withdraw money from Paypal to your UK bank account/card you won't be able to get around not paying tax.

If your permanent home is abroad then you don't have to. But from the sound of your post, you're going to have to declare all earnings and pay the relevant tax to HMRC.

There is a foreign income section on the self-assessment forms you will need to fill out.

In short, you're not going to be paying taxes in the country you're in now. You're not a resident there, but you are a resident of the UK and a UK tax payer. I'm assuming this is all online income, correct? There's no getting around that. As such, anything that goes into accounts that are operated in the UK (PayPal, your Bank) are going to have eyes watching.

Thanks guys, im new to doing all this. Say for example my end of year earnings are £20,000 and my outgoings are £10,000. And say the threshhold in the the UK is £10,000 ( think it may be 11k ) . My profit is 10k, even though this is below the threshold, do i still need to claim it??

Also me and partner do it all together but all the money comes through one Paypal and exits to one UK bank account, can we split this if we need to do a form?

Uk tax basically works by deducting legitimate expenses from income. You then pay tax on the balance. So you are correct in your £20,000 - £10,000 example. But you do need to keep records and report them.

By being creative about your expenses you can minimise profits and as such tax. If your building a lifestyle business rather than one to later sell the less profit the better and the less tax you pay.

Provided you tell hmrc it is tax avoidance, which is legal. If you dont tell them, it becomes tax evasion and that is illegal.

Mixing personal and business money can get messy for you to keep accurate records. So you may wish to consider setting up a uk ltd company and running all business income/expenditure through that.

Nice one thanks, anyone know if you can claim the paypal fees back ??

LeioneSEO said:

Nice one thanks, anyone know if you can claim the paypal fees back ??

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Yes of course it is a business expense, just like banking fees.

Remember you need to keep records and be able to prove it was a business expense and then tell hmrc.

GringoMonkey said:

Yes of course it is a business expense, just like banking fees.

Remember you need to keep records and be able to prove it was a business expense and then tell hmrc.

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I will do!!

Ive only started making really good money in last 2 months, ive seen the deadline for self assessment has passed, would that mean i would file all thia next year, as ive only recently started trading ?

Also the work is divided between me and my partner, however we use one paypal account and withdraw to one bank account. This is all under my name, but we share the money in expenses to live, is there somewhere i fill this out ?

LeioneSEO said:

I will do!!

Ive only started making really good money in last 2 months, ive seen the deadline for self assessment has passed, would that mean i would file all thia next year, as ive only recently started trading ?

Also the work is divided between me and my partner, however we use one paypal account and withdraw to one bank account. This is all under my name, but we share the money in expenses to live, is there somewhere i fill this out ?

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That is why it is messy to mix personnal and business. How do you untagle all that for 2 different people?

A cleaner model is...

Uk ltd company - paypal - business account (all income and expenses) - pay yourselves separately.

Then your business files its accounts with hrmc
You file your tax
Your partner files their tax

Also when you say a lot is it likely to be over £83,000 per year total income?

I don't know about over sees income. I remember about 10 years ago somebody I was at uni with said they didn't need to pay uk taxes as they had been working abroad for over six months. Don't know if that's the truth.

But for declaring your income. You still need to declare it even if it is below the taxable threshold.

Use stealth paypal in Asia and get your payment on it

I will consider setting that up then and ina year total income will vary. E.g month one was $1000, month two $8000 and so on, could all dry up and not hit projections so hard to say.

Paypal stealth account ? How do you withdraw to your account without being seen ?? Or do you keep the money in an use it for purchases ?

Consult an accountant man! Many countries have rules - like if you're on their land for more than 180 days. You need to file taxes there as well. If both countries have tax contracts - you need to first file taxes in country you live then you can claim that in uk taxes and file leftover taxes in UK.

Best to consult a professional.

Wouldn't you then be paying tax in the country where you reside ?

To be honest, it's much more complicated than most people here claim.

1. First of all, unless you have an employment contract with a registered employer, who pays taxes for you, you are OBLIGED to be registered as a business entity (whether in UK or elsewhere).
2. If you do any business with clients from outside of UK, you have to be VAT registered (and you should have done this before the first transaction), and add VAT to your price whenever applicable.
3. You should submit quarterly reports to local (UK) agency (I do not know the name since I am not from UK), where all these transactions will be summarized (it's for purposes of ensuring that VAT is paid by some party of the deal, that the EU does not lose money on VAT)
4. I do not know if you do business with companies/people from Asia, but if you do, you should be registered for VAT even there
5. It's totally unacceptable to mess personal incomes/expenses with business income/expenses, especially on PayPal. Any accountant will refuse to take you as a client because of this.

I could go on and on, but I guess it makes no sense...

The truth is that the system is overly bureaucratic, and not ready for the online entrepreneurs of 21st century (who may sometimes do deals of $1.99 with people from dozens of countries, and in such a case to report them correctly would actually cost more than what you'd make...).

That's why if I was in your shoes (which luckily I am not ), I'd just set Payoneer, withdraw money there regularly, report nothing, and live happily in Thailand...

Kikerinka said:

To be honest, it's much more complicated than most people here claim.

1. First of all, unless you have an employment contract with a registered employer, who pays taxes for you, you are OBLIGED to be registered as a business entity (whether in UK or elsewhere).
2. If you do any business with clients from outside of UK, you have to be VAT registered (and you should have done this before the first transaction), and add VAT to your price whenever applicable.
3. You should submit quarterly reports to local (UK) agency (I do not know the name since I am not from UK), where all these transactions will be summarized (it's for purposes of ensuring that VAT is paid by some party of the deal, that the EU does not lose money on VAT)
4. I do not know if you do business with companies/people from Asia, but if you do, you should be registered for VAT even there
5. It's totally unacceptable to mess personal incomes/expenses with business income/expenses, especially on PayPal. Any accountant will refuse to take you as a client because of this.

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That is absolute crap! Your giving tax advice for the uk and then say you dont live there, work there or do business there and you dont even know the name of the tax authority, which is hmrc... but then profess to know how it works, go figure!

£83,000 matters because if in 4 consecutive quarters your income rises above that you are legally obliged to register for vat. Though actually i think it has just gone up to £85,000. Lower than that you do not need to register.

Accountants will deal with you no matter how messy your accounts are. But the messier they are the more they charge.

It is pretty straightforward to do business in the uk as a citizen, if you understand it. It is far less bureaucratic than other parts of the eu. Which is why lots of french businesses for example register there instead of france and why the eu is nervous about brexit on business. Tax is not the same across the eu.

However, based on your answers you seem to have a complete lack of understanding of the legalities of running a business which will get you in legal trouble. Ignorance is no defense, so i would suggest you hire some professional help else there is a good chance you will fall foul.

I am not much knowledgeable regarding UK TAX, So I can't comment much more. But for sure, PayPal report to HMRC as a Financial Institute.

Hope this will helpful for your:
https://www.gov.uk/income-from-selling-services-online
https://www.gov.uk/tax-foreign-income

You can think whatever you want to.
We are both EU citizens, and brexit has not happened yet.

I paid a decent sum of money for consulting services on the subject, and currently work with one of the best accountants in the country.

If you think that you can just go to Thailand, buy a website, charge clients from all over the world (or even do as simple thing as earning from Adsense om your site) without being registered as a solo entrepreneur or as a company, and without being VAT registered (not because of your turnover but because you do overseas transactions) you are very wrong...

But as I say--you do whatever you want. I only tried to give some real advice to the OP, which comes from real experience with similar transactions as they do and accounting advice on them, and not from some simple website or school.

GringoMonkey said:

That is absolute crap! Your giving tax advice for the uk and then say you dont live there, work there or do business there and you dont even know the name of the tax authority, which hmrc... but then profess to know how it works, go figure!

£83,000 matters because if in 4 consecutive quarters your income rises above that you are legally obliged to register for vat. Though actually i think it has just gone up to £85,000. Lower than that you do not need to register.

Accountants will deal with you no matter how messy your accounts are. But the messier they are the more they charge.

It is pretty straightforward to do business in the uk as a citizen, if you understand it. It is far less bureaucratic than other parts of the eu. Which is why lots of french businesses for example register there instead of france and why the eu is nervous about brexit on business. Tax is not the same across the eu.

However, based on your answers you seem to have a complete lack of understanding of the legalities of running a business which will get you in legal trouble. Ignorance is no defense, so i would suggest you hire some professional help else there is a good chance you will fall foul.

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Kikerinka said:

You can think whatever you want to.
We are both EU citizens, and brexit has not happened yet.

I paid a decent sum of money for consulting services on the subject, and currently work with one of the best accountants in the country.

If you think that you can just go to Thailand, buy a website, charge clients from all over the world (or even do as simple thing as earning from Adsense om your site) without being registered as a solo entrepreneur or as a company, and without being VAT registered (not because of your turnover but because you do overseas transactions) you are very wrong...

But as I say--you do whatever you want. I only tried to give some real advice to the OP, which comes from real experience with similar transactions as they do and accounting advice on them, and not from some simple website or school.

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Your mixing up what the op asked, where he is and what i said.

Unless you have a work permit you cannot do any work in thailand. Though op did not specify where in asia he is.

He is operating a business and receiving income out of the uk so that is the tax jurisdiction it operates under and uk vat has a minimum threshold.

As an aside why did you pay for uk tax advice when it has no use to you?

OK, now I read the thread a bit more carefully .

But still, some things are not clear to me. Not sure who's the OP employer (UK or foreign company?), who sends him the money, if he works for different entities (from different countries), etc, and even if he has a contract or not (in one post claiming to work remotely, in other to be a freelancer)...

Hard to give any advice without knowing the exact details, and maybe my advice wasn't correct, because I imagined them doing more as they are actually doing. Sorry if I offended you Gringo .

Anyway, OP, if you want, clarify more on your status and sources of income.... then maybe someone here will be able to give you the most accurate advice.
Because all the details I mentioned above play the role, and what you should legally do, and what your "greyhat" options are, depend on all these details...

GringoMonkey said:

Your mixing up what the op asked, where he is and what i said.

Unless you have a work permit you cannot do any work in thailand. Though op did not specify where in asia he is.

He is operating a business and receiving income out of the uk so that is the tax jurisdiction it operates under and uk vat has a minimum threshold.

As an aside why did you pay for uk tax advice when it has no use to you?

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