Affiliate Tax Information - UK

There are numerous Online 'businesses' that you can join now. A huge proportion of these schemes are scams, but the taxman doesn't care. If you make money, you pay taxes. It's that simple.   
If you believe that the scheme you've joined is genuine, you have to declare it, just like with any other business.

The information below is related to the PONZI scheme Banners Broker, but it also applies to  ANY online scheme you join. 

Banners Broker:
The tax implications for a Banners Broker account are now becoming apparent. This extract below was recently posted onto the Banners Broker Facebook page but has since been deleted. Credit to 'the guardianuno'  at MMG for getting a screen shot:

Banners Broker states continually that if you are an affiliate you are running a 'business'. 

So what are the implications for you if you are running this business account from home?

Have you got an accountant?

The tax deadline for self assessment is Jan 31st this year and you will be fined £100 a day if you don't file your accounts.
Have you been paying National Insurance on your earnings?
Contact your tax office for advice.
Have you notified your local council? 
You may be liable for business rates.
Have you notified your morgage lender? 
They need to know about any change of use on your property.
Have you notified your insurer?
Your home/contents/building insurance may be deemed invalid if you don't notify them of your business use.


E-business and tax

(Information for UK-domiciled merchants only.)
Where there is business, there will be taxes, whether the business is online or off. 

If you are taking an existing business online, you're probably familiar with most of this advice. If not, this is vital information when you're starting out.

Income tax

Income tax is payable on your income from employment or self-employment. HM Revenue & Customs (HMRC) sets a tax-free allowance for you - you pay tax on the rest. The amount of income tax you pay on your business income depends on the amount you earn and the type of business:
Don't pay too much tax!

There are a number of tax reliefs than can reduce the amount of income tax you pay; find out which you are eligible for and apply for them via the HM Revenue and Customs Website.
Sole trader: you pay income tax on your business' profits rather than on the salary you pay yourself. You're responsible for paying your own income tax (and National Insurance - see below for more information) by filling in a tax return every year. Once you are registered as a sole trader, HMRC will automatically send you a tax return form that suits your particular circumstances.
Limited company: as an employee you pay income tax on your salary, normally deducted automatically from your wage via the Pay As You Earn (PAYE) scheme. But as a director of a limited company, you'll also need to fill in an annual tax return. Business Link advice advice will help you with this.

National insurance

Most sole traders and the managing directors of limited companies must pay monthly National Insurance (NI) as well as tax to HMRC.

In exchange for NI contributions you'll most likely be eligible for certain benefits such as a state pension and Jobseeker's Allowance.

NI isn't one-size fits all: there are different types of flat-rate or wage-based contributions. Make sure you know what your correct NI payments should be. If you get it wrong, there could be a substantial bill and/or a penalty later on.

Have a look at National Insurance information.


Council Tax and Business Rates - Working at or from home

The Valuation Office Agency is responsible for banding all domestic property (in England and Wales) for council tax purposes. We value dwellings, not used for any non-domestic purpose, according to our assessment of capital value on the open market on 1 April 1991 in England and 1 April 2003 In Wales.

All properties are placed in a band according to their value on the same date to ensure the system is fair to everyone. If your property did not exist on, the valuation date, staff in our local offices will have access to sufficient information about sales of similar properties to be able to work out what the value would have been at that date.

This fact sheet explains how you could be affected if you use part of your property for something other than as living accommodation.

Working from home:
If you work at or from home, the part of the property used for work may be liable to business rates (also known as non-domestic rates) whilst the remainder of the property will continue to be liable to council tax (although an alteration may be made to its banding).

To decide whether or not part of your property should be liable to business rates there are a number of things we have to consider, including the extent and frequency of the non-domestic (business) use of the room (or rooms) and any modifications made to the property to accommodate that use.

Each case is considered on its own merits, and normally we will visit your property to check the facts before an assessment is made for non-domestic rates.
Business Rates

If your property needs to be assessed for business rates we will work out a rateable value for the part that is used for non-domestic purposes. Rateable values are based in broad terms on the annual rent for a building or part of a building if it was available to let on the open market at a fixed valuation date. Currently this is 1 April 2008.

It is important to note that rateable values are a key factor in the calculation of business rates but they are not the rates bill. An increase or decrease in rateable value does not automatically lead to a smaller or larger bill because the final calculation is based on a number of other factors. These include transitional relief and the multiplier, (rate in the pound) which is set by the Department for Communities and Local Government (for England) and the National Assembly for Wales. Local authorities are responsible for calculating actual rates bills and for collecting rates.

For more information, please contact your local Valuation Office - details are in the phone book - or visit and - both official government websites.

Below are some examples of assessments we might make where part of a property is used for both domestic and non-domestic purposes.
A detached Edwardian dwelling in a residential area owned and occupied by a self-employed solicitor who practices from the property, specialising in matrimonial law. The front room on the ground floor is furnished with sofa and comfortable chairs, has a TV set, and ornaments/photos of a personal nature displayed around the room. It is used on an occasional basis as a waiting room for clients during weekdays, and as the lounge by the solicitor during evenings and weekends. The former dining room is used as an office equipped with computer, dedicated fax and telephone line, filing cabinets, desk and shelving stocked with law books. No domestic use is made of this room. It is used by a part-time secretary when the solicitor is visiting clients or attending court. The ground floor kitchen is used for preparation of family meals, but also to make tea or coffee for clients. The first floor accommodation of bedroom and bathroom is wholly used for domestic purposes. Our assessment: The office is the only non--domestic part and will be assessed for business rates. The main purpose of the front room is to serve as a lounge. In this instance, the non-domestic use is sufficiently minimal so as not to warrant assessment for business rates. The lounge and the remainder of the dwelling will be banded for council tax purposes.
An integral garage of an estate house is converted to an office with plastered walls, electric power points, solidfront, suspended ceiling and floor screed suitable for carpeting. A separate telephone line has been installed. Access is through the hallway of the house. All toilet facilities are in the main house. The room is used by the family in the evenings and occasionally at weekends. During the day the occupier designs computer software. He is employed by a major company to work at home, because of a physical disability. All of the equipment has been provided by his company and is specially adapted for his needs. He visits his employer's office on an occasional basis for meetings with colleagues and customers. Our assessment: The former garage is no longer domestic property. It has been adapted for office use and should be assessed for business rates. The remainder is domestic.
The occupier is employed as a site finder by a major building company, and travels across most of the southern part of the country, using her home as a base, but calling into the company office once a week to pick up new instructions, for meetings, and to leave completed work. She has a four drawer cabinet in the corner of a dining room, which also functions as an 'office' for the family computer, and there is no dedicated telephone line for business purposes. The occupier is out visiting sites four days a week, and does 'writing up' at home on the dining room table in the evenings and at weekends. No clients or members of the public visit the house for business purposes. Our assessment: Dwelling is domestic property, and should be banded for council tax.
A doctor uses a room in his house as a consulting room three days a week. The main practice surgery is situated some three miles away near the town centre. The house is more convenient for patients who live locally. A concrete ramp has been added to the front door and the door opening to the hall and the consulting room has been widened to accommodate a wheelchair. No one in the doctor's family is disabled. In the room itself there is an examination couch which is essentially a single bed with a cotton sheet thrown over it. A paper sheet is added and removed after use by each patient. There is no office desk as such but there is a computer, table and chair in a corner of the room, which are used by the doctor during his consultations. No patients records are held at the house, nor are there any medicines. Basic medical equipment is kept in the doctors medical bag or stored in a drawer after use. There is planning consent for use as a branch surgery and part of the front garden has been surfaced to accommodate two to three extra private vehicles. There are parking restrictions in the street. On the walls of the consulting room the doctor has attached pictures painted by his young children, and there are toys in the corner of the room, which belong to his children but can be played with by young patients. There is a brass sign outside the front door to advertise surgery hours. The remainder of the week the doctor attends surgeries at the main premises, and in the afternoons he makes house calls. Other than for consultations the room is often unused, but when friends come to stay it can be used as a spare bedroom. At weekends, and some evenings the doctor uses the room to read professional papers or watch a portable TV away from the children. Our assessment: The principal use of this room is as a doctor's surgery, and occasional use for domestic purposes is minor. The room should be separately assessed for business rates, and the remainder of the dwelling banded for council tax.
A teleworker formerly employed by a large national company in a call centre now works for the company five days a week at home, using a spare bedroom to house an office desk, telephone consul, computer terminal and chair all supplied by her employer. Her hours are flexible but generally the room is used for the purposes of work at least 40 hours each week. During evenings and weekends it is used by other members of the family for leisure purposes, and by the taxpayer for doing domestic chores such as ironing. No physical alterations have been made to the property other than installation of new telephone lines, and no members of the public or work colleagues visit the house for business purposes. Our assessment: Rateability will not arise unless equipment of a non-domestic sort is installed or the property is physically adapted for the business use. This is because the character of the room remains as domestic living accommodation, and the purposes of living accommodation may include recreational and leisure use and work. Also the taxpayer uses furniture and equipment of the kinds that are commonly found in domestic property.


Home insurance for home based workers:

What home insurance cover do you need when working from home?

Working from home – it’s peaceful, productive and free of responsibility… or is it?

If you’re one of the growing number of people who now work from home, you’re responsible for making sure any home office equipment is safe and secure.

That means it’s down to you to organise insurance against theft, loss and damage.

There are two types of contents insurance:
The cheapest type is an 'indemnity' policy, which takes into account an amount for wear and tear.
The more costly type is a 'new for old' policy. This means you’ll be paid the full amount for any item lost, stolen or damaged.
Do I need additional insurance when working from home?

Your standard home contents insurance policy may not be adequate to cover you while working at home, as domestic insurance generally only covers ‘administration’ duties.

You may want to supplement your standard contents insurance by adding an ‘all-risks’ policy for business equipment. An all-risks policy can cover loss or damage, including for when a business item is taken away from home (e.g. a business laptop).

Also, if your type of home work requires visitors to the house for purposes related to the business, you should consider Public Liability Insurance. Though not compulsory, public liability cover protects you from loss or damage resulting from claims made by anyone who visits your home in connection with your business. It also covers legal fees and other expenses to do with defending a claim.

In short, read your existing contents policy and check out the level of administration duties that are covered in relation to home work, and upgrade if necessary. And if your job means occasional visitors to your home on business grounds, then consider an adequate level of public liability insurance.
What items are covered?

A typical contents insurance policy will include electrical goods (hi-fi, TV, DVD player etc), your CD and DVD collection, furniture, carpets, clothes, ornaments and paintings. Some insurers automatically cover up to £5,000 of home office equipment, but be aware - you may need additional cover for specialist items such as expensive audio visual equipment, photocopiers etc.

Contents insurance can also be extended to cover items that you leave home with, such as a laptop, computer or mobile phone. Alternatively you can insure such items separately with an ‘all-risks’ policy for business equipment.
How much cover should I have?

Keep receipts as proof of purchase and be honest with your insurance company as to how much items cost. If you under-insure your contents, you won’t receive the full compensation if you need to make a claim. Over–insure and you’ll be wasting money by paying a higher premium than needed.
Ask for advice...
Once you’ve found an insurer that meets your needs, get answers to the following questions before signing up to a policy:
What exactly will it cover?
How much will premiums cost?
Is there a no claims bonus?
Does the insurer provide a 24-hour legal and emergency advice helpline?
What is the level of excess (the amount of the claim you’ll have to pay)?
What is the level of excess to be retained by your business?
Do I need other insurance if I’m working from home?

As mentioned earlier, you may want Public Liability Insurance if you expect visitors to your home for reasons of business.

You may also be legally required to have Employer’s Liability Insurance if you have employees.
There are other types of insurance you may wish to consider such as travel insurance, which is essential if you or your employees ever travel abroad.

Also, if required, make sure you upgrade your car insurance to cover business use for you and any employees who might use the vehicle. And likewise, if you use a van, you will need van insurance.

Home-based business

While it's definitely cheaper to run your business from home, there are still plenty of financial matters for you to sort out.

Follow this ten-point plan before you get started:

1. Check with your mortgage lender:

Most mortgage lenders won't object to you running your business from your home as long as it's still mainly residential; but you should let them know. If you've only got a computer and phone in your spare room, it's unlikely to affect your mortgage, but if you convert your home into a workshop, your loan may be switched from a residential to a commercial one.

2. Capital gains tax: Under current tax laws, you don't pay capital gains tax when you sell your home. But using it for business could result in a capital gains tax bill when you sell. It all hinges on the definition of 'incidental' use, so consult your tax office. If you're already offsetting expenses from using your home for business against your tax bill, you don't need to tell them separately.

3. Need a loan?: Whatever your business, you'll probably need some capital to get started, and that could mean a bank loan. Not all the major banks offer business loans for small amounts (around £5,000), so you may find your choice limited. If you want to raise a larger amount of money, be careful about using your home as security. This is especially important if you're in the early stages of your business and you don't have many customers. You could lose your home as well as your business.

4. Overdraft and banking: An overdraft is useful for the short term, as it's quite flexible and you can pay it off at any time. However, you shouldn't rely on it for long-term financing, as your bank can cancel it when it wants to. Never resort to an expensive unauthorised overdraft. If you want to open a business bank account, you'll probably have to pay for your transactions (unlike most personal accounts). Most banks will give you several months' initial free banking.

5. Insurance: Ordinary home contents insurance will not normally cover faxes or computers for business use. That doesn't mean you'll have to switch insurer, some will add on a 'business use' clause, either free of charge or for a small premium. For more expensive specialist equipment, consult a specialist broker.

6. Tax: Part of running your own business or working as a freelance will involve sorting out your tax. That means filling in a self-assessment tax form. It's up to you to let the tax office know if you have untaxed earnings, and there could be heavy fines if you don't. You don't need an accountant simply because you're self-employed, but if your affairs are complex you may be well advised to use one. Don't forget to keep all your receipts.

7. Planning permission: Broadly speaking, if you need to alter the structure of your home to run your business, you will need planning permission. If, on the other hand, you use your spare room as an office, but can still use it as a spare room if necessary, you won't have 'materially changed' its use, so planning permission shouldn't be necessary. The catch is that the definition of material change of use is open to interpretation by local authorities. If you're in doubt, it's wise to contact a planning consultant.

8. Renting your home: If you rent your home, check that your landlord won't object to you working from home. If your business will cause no disruption to either the house or your neighbours, your landlord should have little to complain about.

9. Property deeds / lease: If you own your home, the property deeds may have a paragraph relating to business use, especially if you live on a large estate. Developers often include a clause in the deeds banning business use to make sure that the area remains residential. If it's leasehold, check that the lease doesn't have any restrictions.

10. Get support: If you're about to start working from home, make sure you don't isolate yourself. From time to time you'll need someone to call on. It could be a friend, someone who's in a similar line of business, or your spouse / partner.

My advice to you is to seek PROFESSIONAL ADVICE. 

Don't bury your heads in the sand and think it will go away or that it doesn't apply to you. It does!

There is a saying that goes like this:

'The only thing you can be sure of in life is death and taxes'.

Chris Smith will soon be long gone...

the taxman will ALWAYS be here!

No comments:

Post a Comment

Please do not post links or email addresses on your comment.