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I live in UK and only pay taxes here. Every year I need to submit my self assessment but until now I only had my regular job, so all taxes were paid at source and I simply had to report this in the self assessment.

Starting this year I have opened a website where I have a private area that people can access if they pay a monthly subscription. So essentially I am selling a service online and I would like to understand how is this activity taxed?

I still have my regular job so I will still report my income in the self assessment but I was wondering if the additional income I get through the website subscriptions will need to be added to my regular income (and taxed accordingly) or if they can be classified and taxed differently.

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I am not a tax accountant, so you might want to get some professional advice, but as far as I know it [edit: the level of faff and bureaucracy involved, not the tax rate] depends quite a lot on whether you make more or less than £1000 / year from this.

There is a £1000 allowance for "Trading Income" where if you make under that amount from self-employment or casual work in a year you don't have to declare it, however this only applies if you're not already doing Self Assessment so in your case it would still need to be declared. The good news is that you can also claim expenses relating to the trading.

If you do make more than £1000 - and specifically as it is from a subscription service rather than from casual work like babysitting or whatever - you would need to set yourself up as a sole trader and declare it as self-employment income on your Self Assessment. More info here.

In either case it's then taxed in exactly the same way / same bands etc as any other income.

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  • Hi, so I can be both employed and self-employed at the same time. But in this case, can I deduct all costs associated to running my website? I expect that income from subscriptions might go a bit above £1,000 but I have costs for £200 just to have the website up and running. Will I be able to deduct these expenses in full? – Diuoo May 2 at 10:16
  • Yes, you can be employed and self-employed at the same time. And in your self-employment you can deduct your "allowable expenses": gov.uk/expenses-if-youre-self-employed – Vicky May 2 at 10:18
  • At the link you posted in this comment they say "You cannot claim expenses if you use your £1,000 tax-free ‘trading allowance’". So if I have subscriptions for £2,000 during the year and my website costs are £250 then I cannot apply the £1,000 tax free allowance, hence having only £1,000 taxable income, and then deduct further £250 for expenses so that I only pay tax on £750. Is that correct? So you only claim expenses if they are above £1,000 otherwise it doesn't make sense. – Diuoo May 2 at 10:42
  • Broadly, you can either itemise the profits and expenses and claim with the full details, or you can use the £1000 trading allowance and then not claim any expenses. Which route is better for your specific circumstances will depend on the relative values of your income and expenses. There is more info about this in the first link in my answer. – Vicky May 2 at 10:56

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