The affiliate program gives rise to affiliate income. The easiest way of describing the affiliate program is to say that you get paid through a referral code. You list the product or service on your website, and when a consumer orders the same, you get paid in a percentage. Referral income is also known as a commission payment.
The affiliate program for different companies is different. Various companies and websites offer a different percentage. Like Amazon, some companies offer you different commission and even pay you for every article you list over the website.
Although if you are employed, you do not have to worry about paying affiliate income taxes, as it is deducted right at the income source. However, if you have another source of income apart from your salary or a self-employed person, you will need to fill out the self-assessment form with HMRC.
If you are earning through affiliate marketing, then you should definitely fill out the self-assessment form.
Well, as per the laws in the UK, affiliate marketers or earners come under trades. Since all affiliate marketers are provided with a commission, the law and the government classifies such people as traders. So, if you are earning through affiliate marketing and have a job alongside, you will still be classified as a trader, and you will be required to pay affiliate income tax on such income by filling the self-assessment form.
When you are classified as a trader or a self-employed person, there are some expenses that you will require to run your business. These expenses could be the costs of telephone bills, running your website or any other cost. Such costs are deducted from profits, and you do not need to pay taxes on them. However, you will be required to pay taxes on the profit that remains.
Affiliate income comes from affiliate marketing, and there are two ways to go about it.
As a successful affiliate marketer, you need to check out VAT expenses. If your income is more than £85,000 in the past 12 months, then you will have to register for VAT as well.
If you are an affiliate marketer, then here are some allowable expenses:
However, a point to remember is that there is no definitive list of allowable costs for affiliate marketers. All individuals who take part in affiliate marketing will have different costs, and the allowable costs will depend on the reason and the type of business.
Using the HMRC online tax return service is the most convenient way to send your tax return. To use this service, you will need a user ID and password, which you will receive when you register for your self-assessment. The UK tax year runs from April 6th to April 5th of the following year. Make sure you don't miss any deadlines, or you'll face penalties.
Submission of tax return is not at all an easy affair as your one mistake can prove to be a costly one. Our experts at DNS Accountants can help you submit a tax return in a short time and most efficiently, so that you will feel relaxed and comfortable and concentrate on your other core business activities that you cannot take due to time issues.
In case you are having any query or want specialist advice on "Investing in properties through a trading company", kindly call us on 03330886686, or you can also e-mail us at enquiry@dnsaccountants.co.uk
Any questions? Schedule a call with one of our experts.
Sumit Agarwal Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.
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