Paying tax on your blogging income
It is easy to start up a blog and make some money, but do you need to pay tax on this income? The short answer is yes you probably should pay tax and will need to inform HMRC of your income and declare it on a Self Assessment return but there are some exceptions which we will cover below.
The amount of money earned from blogging varies enormously from one blogger to another. Some view their blog merely as a hobby and only make a few pounds each month which they then plough back into their site. Others, however, are making thousands of pounds worth of income each month and it is no wonder the taxman is keen to take their slice of the pie.
What blogging income is taxable?
Unfortunately, all the income you make from your blog will be taxable. Examples of these taxable earning streams include.
Affiliate marketing income whereby you promote other people’s products normally through some affiliate network and earn a commission if people click a link on your site and make a purchase. This will be taxable.
Advertising income from people clicking on adverts you have on your site whether it is Google Adsense, banner advertising or any other form of advertising will also need to be declared as income.
Basically, any money you receive because of you having a blog will need to be declared to HMRC generally through a Self Assessment tax return. Failure to do so tend to upset the tax man and he may start to send you nasty letters if he finds out you have not been paying tax on all your taxable income.
Blogging income less than a thousand pounds a year
Until recently HMRC expected everyone to declare all the money they earned from whatever source. However, as many people only earn very small amounts of money from their hobby blogs HMRC introduced a special allowance for self-employed individuals back in 2017. This new allowance was set at £1,000. This meant that all self-employed people who ran their own business whether blogging, earning commission or buying and selling products did not have to complete a Self Assessment return as long as their income was less than £1,000.
This new allowance means that if you only earn a small amount of income from affiliate marketing then you do not need to complete a Self Assessment return. This is particularly good for any newbies who are interested in blogging but are put off by having to register with HMRC as now they do not have to until they are receiving more than a thousand pounds of income a year.
My blog makes more than a £1,000
If your blog makes more than a thousand pounds a year, then, unfortunately, you will need to inform HMRC of your income. The tax man expects any self-employed people to register their business with him within 3 months of starting so if you expect to receive over this limit you should contact HMRC and let them know of your blogging income.
Once you have registered with HMRC they will send you a Unique Tax Reference or UTR to confirm you have registered with them and you will need to quote this in any correspondence you have with them. If you are in any doubt about whether to register or not the easiest way to find out is to contact HMRC and explain your situation and they will point you in the right direction.
If you expect your blog to do really well then for tax and legal reasons it may be worth setting up a limited company.
Allowable taxable deductions
HMRC allow you to deduct any costs in running your blog from the income you will have to pay tax on. These allowable deductions include.
The domain registration fees you pay to own your blog name.
Web hosting costs that you pay to 123Reg, Godaddy or whoever hosts your site for you.
Any promotional or advertising costs such as Google Ads or Facebook ads that you run to promote your site are all deductible costs.
Even a share of the costs for your broadband, electricity, gas and telephone calls are deductible. These can be estimated based on the amount of time you spend blogging as a percentage as opposed to the amount of time you are not typing away on your blog.
Any software you buy related to your blog whether it is on SEO or how to use WordPress can also be deducted if you can identify them so if you buy some genealogy software to trace your family tree it will be allowable if your blog is about genealogy but not if your blog is all about your pet dog.
If you also need to buy a new laptop, scanner or other equipment for your website then these too will be deductible. Basically, any costs you incur that are wholly exclusively and necessarily related to your blog will be allowable.
Other taxable allowances
As well as the £1,000 trading allowance mentioned above HMRC also gives everyone a Personal Allowance. The standard Personal Allowance in 2019/20 is £12,500 for everyone in the UK. This is the amount of income you can earn before you need to pay any tax on it. Many bloggers will have other sources of income, so you need to add all of these up to see if you exceed £12,500.
If you are currently employed and only earning small amounts from your affiliate income, then a quick call to HMRC might mean they simply amend your tax code to save you the hassle of submitting annual self assessment returns.
Other potential taxes on your blogging income
If your blog is a business then you will also need to pay Class 2 National Insurance payments of £3.05 a week. You will also be liable to pay Class 4 National Insurance contributions of 9% on any profits between £9,501 and £50,000 per year and you pay 2% on any profits over that. If your blog is successful and your income exceeds £85,000 you will also need to register for VAT.
If you are not sure about the amount of tax to pay on your blog, then it is probably best to speak to an accountant who will give you advice based on you own personal tax position. It may be that if you are earning decent amounts of income from your blog that they suggest you should form a limited company as this might be the most tax efficient method of dealing with your blogging income.
Invoices and receipts
Make sure you keep all your paperwork relating to your blogging income as well as any invoices and receipts you receive. You will also need to keep your bank account statements as you will need these when you come to complete your Self Assessment returns or if HMRC ever decide to come calling.
If your blogging income is less than £1,000 you do not need to submit a Self Assessment return but check HMRC’s website or speak to an accountant to be sure as everyone’s personal situation is different.
If your blogging income exceeds £1,000 a year then unfortunately you will need to report your income to HMRC however you can deduct costs such as your domain registration fees, hosting costs and any other relevant costs to reduce your taxable profits from your blog.