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I am starting to take on small freelance projects as a side gig. I am currently a UK taxpayer, but my clients are located in the eurozone.

Because my UK bank charges for incoming transfers from abroad, I suspect the most effective way for me to receive payment without incurring these charges would be via PayPal.

Does anyone know if receiving income through PayPal would cause any difficulties regarding tax payments in the UK?

  • Have you considered opening a Euro bank account? You'll lose something like 5%+ with PayPal if they do currency conversion. Edit: Ah, I see @Ganesh has already suggested that. – Spehro Pefhany Jan 21 '18 at 20:36
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No, PayPal or any other standard way of transferring money won't cause any tax difficulties. You will need to register yourself as self-employed and submit self-assessment tax returns - when doing so, you should just record the payments as income, and record the charges PayPal makes as expenses.

I don't have any personal experience of doing this, but if I was going to I'd also take a look at some other money transfer services, e.g. Revolut's personal euro accounts or Transferwise's borderless account. They might have lower charges and/or a better exchange rate (I have no personal connection to either).

  • Thanks for the tips about the euro accounts, sounds like they're worth checking out. – manyaceist Jan 22 '18 at 18:55
  • You might want to not set up as a sole trader there are tax advantages to setting up your own company and its very cheap tp do this in the UK. – Neuromancer Feb 8 '18 at 22:41

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