The rise of the professional blogger and those who monetise their personal blogs has crept up slowly and now, everyone’s doing it. For some people it’s a genuine source of income, for some it’s their business and others simply do it for a bit of extra cash. In every instance you earn tangible money from your blog – you need to be in discussion with the HMRC. In fact, even if you’re only thinking about earning money from your blog you should consider registering with them too.
Earning money from blogging takes you into the realm of self-employment and tax. The HMRC offer NO minimum limit on the amount you have to declare as extra income. This means as soon as the cash received from your blog exceeds the costs of running it then you need to make a declaration to the HMRC. This isn’t as complicated as it sounds.
Many self-employed mums and dads run blogs as a side line and this income should be recorded too. If you’re not self-employed and have an employer but run a profit-making blog then you can simply ring the HMRC and they’ll adjust your tax code to ensure you’re paying the right amount of tax. This rule applies if you pay tax through PAYE and your earnings don’t exceed £2,500. Once you reach that milestone you’ll have to register for Self-Assessment and your blog income will also need to be declared if you’re a tax credits claimant, provided they exceed £300.
Everybody in the UK is entitled to a ‘tax free’ personal allowance from their earnings which is currently £9,440 for 2013 for everyone aged 75 or younger. If your profits and any other taxable income fall below this threshold then you wouldn’t need to pay tax but you still must declare your earnings and profit.
Blogging for Business or Pleasure?
The tax regulations differ slightly dependent on the purpose of your blog. If you’re a WAHM who blogs as part of their business then it is slightly different than if you started blogging for something to do as a past time and it became slowly more popular and you decided to monetize.
If your blog is simply a hobby then you will be able to offset the running expenses (shown in more depth below) against the income. However, you are not able to carry any losses you make forward to offset against other income.
Blogs that are run as a business allow losses to be carried forward or used on the self-assessment form to offset other income. You do need to convince the HMRC that your blog is an effective business and not simply a hobby that costs too much if you consistently make loss upon loss.
If your blog is your business and you have no other income you must register as self-employed within three months of starting up.
There are several ways work at home mums and dads may make money from their blogs including:
- Selling advertising space on a monthly fee basis
- Utilising Google Adwords
- Cash payments for writing reviews or other blog posts
- Writing sponsored posts to include links to the buyer’s client website
- Affiliate sales
- Certain payments in kind
- Any money received to compensate for travel expenses to events
Certain things which are not taxable include any goody bags you may receive at a conference as this is considered a gift and also being bought lunch by a company you’re working with is non-taxable as long as you aren’t doing anything specifically in return for that lunch.
Review products are an issue of contention. As a rule if you plan to use the item in your own home with your family personally than you shouldn’t need to declare it however if you plan to sell the item then you should be paying tax on it.
There are some expenses that you can offset against any income you make as a blogger. These include:
- Your web hosting fees
- Your domain registration
- Any marketing costs you incur including business cards, paying for advertising elsewhere and any software you may use for marketing
- Attending conferences and events in the name of blog promotion
- A calculated percentage of your broadband costs which you need to work out to separate business from private use
- Assets necessary to maintain your blog such as laptops, hard drives and even printer ink – this point is only relevant if you are classed as a business and you will need to discuss these types of expenditure with an expert as they are treated differently to regular expenses.
It could be that you’ve only been blogging a short time and have received a few small opportunities so you don’t think it matters about declaring it. It does. Every £1 needs to be accounted for and the HMRC are aware of the growing blogging network and want to ensure everything is being carried out above board.
Your employer doesn’t need to know if you don’t want them to but you do need to ensure you are paying tax on all that you earn, even if you have only monetised your blog recently.