Second incomes disclosure opportunity was aimed at taxpayers who have not declared any part-time/additional income from self employment. this closed on 7 August 2017.
- This campaign is aimed at UK resident individuals who also have an undeclared second income.
- It will enable individuals to get their tax affairs up to date and make disclsure to HMRC under favourable terms and in most cases avoiding tax penalties.
- Typically the income declared will be income derived from working for yourself.
- You may disclose income for the last year, or going back four or more prior years.
- Tax and National Insurance contributions may apply to undeclared income.
What second incomes is HMRC targeting?
HMRC gives examples of the type of second income that may have not been declared:
- Consultancy fees, e.g. for providing training services
- Fees from party and event organisation
- Income from taxi driving
- Hairdressing
- Fitness training
- Making and selling craft items
- Buying and selling goods, eg. at market stalls or car boot stalls.
What else?
Any other activity that is being run on a commercial basis which brings in a profit, so this would include income from online selling activites and any other form of self employment in any shape or size.
What’s excluded?
- HMRC does not mention in its campaign that profits (or losses) from hobbies which are not run on a commercial basis are not taxable.
- As a rule of thumb if a hobby is profitable then it will be treated as being run on a commercial basis.
- HMRC will disallow sideways loss relief (relief of losses from self employment against other income or earnings) where a hobby is not profitable, so if you are making hand made cards and spending a fortune at trade fairs and shows you might find once it is all totalled up that there is no profit to declare: its a hobby.
How to notify HMRC about second income?
Review HMRC Guidance Second Incomes Campaign
Complete a notification form
Within four months complete a disclosure form and make payment.
How do I calculate my income?
Profits and losses may be calculated using either the conventional accruals basis or using “simplified accounting”.
Need help?
Send your postcode to the Virtual Tax Partner ® and we will connect you to a friendly accountant near you.