Do I Have to Pay Tax for Taking Surveys and Doing Other Online Money Making Activities?
This is a question we are regularly asked by survey takers, mystery shoppers, people taking part in focus groups or testing products. To put it simply the answer is maybe as there are many different rules on the amount of income tax you have to pay depending on your own individual circumstances. However all sources of income should always be declared to HM Revenue and Customs. (HMRC) An more detailed explanation on the whether you have to pay and if so the ways to declare are listed below:
Working Out If You Need To Pay Any Tax
Everyone in the UK has to earn a certain amount per year before they have to pay any tax, this is called your personal allowance. The personal allowance for the year 2012 - 2013 is £8105, £10500 for people aged 64 - 74 and £10660 for people aged 75 and above. If you got married before a certain date then a different personal allowance rate will apply to you, you can check the details on the HMRC site here. If the income you have earned from taking surveys, participating in focus groups, mystery shopping or any other money making activities does is not more than the amounts above then you will not have to pay any tax. (Phew breath a sigh of relief)
Unfortunately though if you have a part time or full time job then your personal allowance will already be used up, unless you are earning less than £8105 per annum. This therefore means that you will have to pay tax on any extra income you make from any money making activities that you are involved in.
Remember to Take Pensions into Account
If you are retired and have a pension then remember that your pension is taxable if it exceeds your personal allowance rate for your age. If you do go over the personal allowance then any other earnings you will need to declare.
How to Declare and Pay Your Tax if Required
If you already get paid from your job and are unlikely to earn over £2500 each year in extra income, then the easiest way to declare and pay your tax is by contacting HMRC and requesting that your PAYE code is changed. By simply changing your PAYE code you will not have to file a tax return and any extra tax you have to pay will be taken monthly from your salary. The only problems with using this method is that you will need to be pretty exact on how much extra you think you will earn each year, if you get the figure completely wrong you will end up under or over paying and have to fill in many more forms to pay the money you owe or get a refund.
If you are earning over £2500 on top of your personal allowance or you don't know have a clue how much extra cash you will earn each year from taking surveys then the other option would be to fill in a tax return yourself or through an accountant. In order to do this you will need to register as self employed with HMRC, you can register by visiting the HMRC website or by getting the relevant forms. After registering you must keep detailed accounts of any money that you are earning and then submit your tax return and pay any money owed each year by certain dates. (31st October if filing through the post and 31st January if filing online)
How Much Income Tax Will I Have to Pay?
For the tax year 2012 - 2013 you will pay:
£0 if you earn below your personal allowance,
20% if you earn between £8105 and £42475 PA
40% if you earn between £42,475 and £150,000 PA
50% if you earn over £150,000