Paying Tax (UK) on e-books

Darklite

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Not sure if this is the right place to ask this question, but anyway, here goes.

This is probably best answered by authors who are based in the UK and
publish with e-pubs. I think I'm about to sell my first novel to an e-publisher. I know I’m not about to make thousands or even hundreds of £ out of it, but all the same, would I have to inform the Tax office or is such a small amount of earned money not worth mentioning until I’ve sold some more books?

Thanks to anyone who can help :)
 

Darklite

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Thanks. It just seems like a lot of paperwork and fuss over what probably won’t amount to much, but I guess it’s better to be on the safe side and declare it :)
 

Terie

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As with anything to do with legal matter (including taxes), you need to be wary with advice given on Internet forums. (Not saying anyone here has given bad advice! Just saying as a general rule. :)) You need to find out from an actual tax professional. For something as small as this, you might even find the answer at the HM Revenue & Customs website:

http://www.hmrc.gov.uk/index.htm
 

Darklite

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Yes, it seems I’m going to have to contact the tax people at some point. I was just after a bit of advice from writers who have done all this before (getting paid for my fiction is all very new to me). It’s early days yet, but these things play on my mind. Eventually I suppose I’ll have navigate my way through all those complicated tax forms, but right now I’m just going to enjoy the idea of calling myself a proper writer ;)
 

veinglory

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The thing is that the press will declare paying the income, so that can get you flagged if you don't declare paying it. To be honest, for small amounts nothign is likely to happen, but better safe than sorry IMHO. You might look into whether you can benefit from the declared income in other ways such as by deducting "costs" associated with writing.
 

Terie

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I can't speak from a position of knowledge for your exact circumstances because mine are different (and much more complicated: I'm a US citizen living and working a day job in the UK with income from a US publisher). But if your income from your UK-pubbed books is small, there's a very good chance that all you'll have to do is fill in a particular form. Below a certain amount, you won't have to actually pay taxes, but you want to start off on the right foot: what if you make it big and start selling your work to the big guys? :D

I used to have (and might still have) e-mail addresses for some UK tax accountants who know how to deal with multi-national royalties. If I can find them, I'll PM them to you. A quick e-mail might be all it takes to get the answer you really need from someone who knows.
 

Darklite

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Thanks :)

I’m a UK citizen, but the publisher is American- I already have to fill in forms to get a tax number so that I’m exempt from paying US tax, which is difficult enough in itself, but while I was thinking about the American tax system, that got me thinking about the UK tax system and if it was worth declaring my royalties on one book. Also, if I don't tell the tax people, how are they going to know I'm earning anything?

On the other hand, as I’m hoping to get more than one book published I’m probably better off declaring everything I earn right from the beginning so I can’t get caught out later on.
 

Terie

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Thanks :)

I’m a UK citizen, but the publisher is American- I already have to fill in forms to get a tax number so that I’m exempt from paying US tax, which is difficult enough in itself, but while I was thinking about the American tax system, that got me thinking about the UK tax system and if it was worth declaring my royalties on one book. Also, if I don't tell the tax people, how are they going to know I'm earning anything?

On the other hand, as I’m hoping to get more than one book published I’m probably better off declaring everything I earn right from the beginning so I can’t get caught out later on.

Ah, I thought it was the other way around. Sorry about that. Still, I wouldn't risk not reporting it.

Bear in mind that if you've never taken a loss on your writing expenses, now you can (assuming your expenses outweigh your income--and if they don't, then woo-hoo!); and if you have previously reported the losses, now you'll have income to offset it...that is, you're proving that it's a viable business. I don't know how long you can report business expenses with no income in the UK before they consider it a hobby.

Basically, writing is a business, and your best bet is to do everything on the up and up. If you get audited (touch wood!) and they spot unreported income, you'll be hosed.
 

Darklite

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Bear in mind that if you've never taken a loss on your writing expenses, now you can (assuming your expenses outweigh your income--and if they don't, then woo-hoo!); and if you have previously reported the losses, now you'll have income to offset it...that is, you're proving that it's a viable business. I don't know how long you can report business expenses with no income in the UK before they consider it a hobby.

Here's a clue on how little I know about tax, I have no idea what most of the above means :Huh: I'm sure it'll all make much more sense when I actually start earning some money (I hope, anyway)
 

Terie

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Here's a clue on how little I know about tax, I have no idea what most of the above means :Huh: I'm sure it'll all make much more sense when I actually start earning some money (I hope, anyway)

If you're actively trying to write for publication, you can claim expenses even if you have no income yet...for a certain amount of time before the tax authorities say it's just a hobby and disallow you to claim the loss. You obviously haven't been doing that when you very possibly could have.

You REALLY need to get with a tax accountant, even if just for an initial consultation. The forms aren't hard to fill out (I'm terrible at maths and I've managed both my US and my UK taxes so far), but you want to be sure you're doing everything right. That is, if you can claim a loss against your other (say, day-job) income, you want to do that, but if you aren't eligible, you obviously don't want to.

Let me say it again....talk to a qualified tax professional. :)
 

Darklite

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Thanks for the advice :) I think I'll contact Revenue and Customs directly and see if they can point me in the right direction for filling out forms etc . I would prefer not to have to pay one of those 200 quid an hour guys to do it for me ;)
 

Terie

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Thanks for the advice :) I think I'll contact Revenue and Customs directly and see if they can point me in the right direction for filling out forms etc . I would prefer not to have to pay one of those 200 quid an hour guys to do it for me ;)

Oh, no, believe me, you won't need to get someone to do it for you. Heck, I did it yesterday with self-assessment online, and as long as you have your numbers together and have a general idea what to do, it's a snap. (It took me 1.5 hr to do the ENTIRE self-assement thing, and about half that time was looking for bits of numbers I forgot to gather and converting dollars to pounds in a currency converter!) All you need is advice on what you can and can't claim. Oh, yeah, and then to start keeping records (always the hardest part for me).
 

Darklite

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Oh yes, that's another thing. I'm getting paid in US cheques, so I've got to go through all the palaver of getting those exchanged. Why did I ever think writing the book was the most difficult part of becoming an author ?
 

nkkingston

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Oh, see if you can be paid by Paypal rather than cheques. I had a short story published by a US mag, got paid $10, took it to the bank and got... 53p. The bank charged £5.50 for converting the cheque. You may want to decide what your personal threshhold is before you cash cheques, because honestly? I wish I'd kept mine for wallpaper!
 

Darklite

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Payment via paypal would be great, but my publisher specifically states it pays by cheque only. I'm still looking for options that don't involve paying the cheque into a uk bank account. The charges are ridiculous.
 

nkkingston

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Apart from opening an American bank account (which could open you to having to pay US taxes? I'm not sure) I don't know what to suggest. Maybe requesting payment quarterly instead of monthly (making assumptions here), or a higher payment threshhold? It's a real pain waiting longer, but at least you won't be giving over 90% to the bank like I did!
 

Darklite

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Yes, it will probably be worth my while asking my publisher to delay payment to reduce the bank charges. Another option I've been considering is auctionchex although i'm not 100 % sure how they work. What I do know is that none of the options I've found so far are ideal :(