It has been in the news lately about major high street companies and big brands not paying their fair share of UK taxes. While these companies are not doing anything illegal, it has ensured that the public have been very vocal in demanding a crack down on tax avoidance. HMRC have answered this call by deciding to crack down on small businesses and hobby earners.
Basically this means that if you are making money from your writing (or any other kind of hobby) then you are classed as a small business. It is in your own interests to register as a Sole Trader with HMRC as soon as you start to earn money, however little your writing income may be. Not only does this demonstrate honesty to the Tax Office, but it covers your back against spitefulness too.
When people know of your published work they might assume that you are NOT tax registered. If you have a fall out with someone, or someone seems a bit envious of your work, calling the tax office to report you for tax evasion is an easy axe for them to grind.
This is not paranoia - it is something that has happened to me more than once so I speak from personal experience. The traitor is always the one you just don't see, and it is usually someone close to you. On both occasions when the tax office has phoned me to alert me to a false report made against me, the report had come from spiteful, jealous women I had previously considered friends and neighbours. There was also the strange case of a shop keeper in the Highlands who rang one of my editors demanding to know if I was tax registered and how taxes were paid via the publisher etc. It's just such an easy target for the envious and malicious to try and hit - they can't seem to help themselves. Of course, they were all left with egg dripping off their faces when they were told by the tax officer that I'd been registered for years and HMRC know all about my writing and recording etc.
The Tax Office have a duty to inform you of any false reports made against you and to let the informer know that you ARE tax registered and all the paperwork is in order - that is, to nip the spite in the bud as a lot of their time is wasted by such false reports. If however, you are NOT tax registered then they have a duty to investigate you - and your enemies have won. So cover your back from back-stabbers by making sure you register with your local tax office as soon as you get published.
It's not just publishing though; it's any small hobby earning enterprise, so if you are involved in multi-level marketing (Avon, Betterware, Cleaneeze etc) or any online sales (Ebay, Amazon Marketplace) or any kind of casual trading (car boot sales, nail and beauty services, etc) you must register this activity with HMRC. If you earn very little you might not have to pay tax at all or you can pay self employed income tax via your PAYE tax account. You just need to complete a tax return form once a year and keep track of income and expenditure - that's it. Yes, the paperwork can be a bind, but as it stops spiteful people in their tracks, it is well worth the effort. It looks good on you CV too, as you will be a Sole Trader with your own part time business enterprise going on in your free time. Who knows how big this enterprise will grow over time?
I know tax is a boring subject and it is my least favourite part of being a self-employed freelance writer. There was a time when I didn't think I had any enemies at all, but that's because they'd successfully disguised themselves as friends and good neighbours. When their masks fell off, I had the satisfaction of knowing I'd done the right thing from the start and of knowing that the local HMRC tax officer had deflected their spite on my behalf.
Take a tip from me; register your writing/business properly to cover your back, before the axe falls at the hands of someone you trusted. You will then have the satisfaction of knowing that their malice has been successfully thwarted and your enterprise is safe from spite.
Writing and publishing is a business. It pays to be businesslike.