Hi there,
I've seen on a few occasions that there are a few accountants floating about, so I was wondering if you lovely people might be kind enough to answer a couple of questions I have:
I pay daily for features on AdultWork.com - sometimes the front page slots also. Now, I use my credits to pay for this, not money from my actual bank, as it were. (I earn my credits and then use them to pay for features.)
So, can this be a tax deductible item? How do I treat credits? If I was to buy them, it'd cost me £1 = 1 Credit. However, when earning them, I get 70% of their cash value.
So, for example, I pay 6.5 credits for features every day. Do I treat that as £6.50 or £4.55 (70%)? Or nothing at all? Is it not tax deductible?
It's confusing as obviously something that is tax deductible I would usually have a receipt for, but with this I only have my credit statement on AW...
My second question, is that I have another client whom I met from a sex forum online and he pays money straight into my bank account, for well, nothing really. Strange as it sounds (he likes to be financially dominated), do I have to pay tax on this? I'm confused as I don't really do anything for the money as it were, we have no set agreement. He just puts money into my account erractically.
Any input highly appreciated.
Thanks,
Curly x
I'm not an accountant but sure one will arrive shortly, I took advice on the first part of your question and I use the figure paid to me by AW as my gross income. It's not strictly speaking accurate but it is incredibly difficult to make the figures tally and it is all there if needed to be shown.
With respect to the second question, I would suspect that because this is money in the course of your business (you wouldn't get it if he wasn't a customer) that you'd need to declare it...but of course there may be lots of rules around side payments.
It also means that you're taking payment other than through AW and that could cause a problem! I don't think it could be seen as a gift because it's part of the financial domination but I stand to be corrected.
(25-07-2012, 03:29)curlytots Wrote: [ -> ]Hi there,
I've seen on a few occasions that there are a few accountants floating about, so I was wondering if you lovely people might be kind enough to answer a couple of questions I have:
I pay daily for features on AdultWork.com - sometimes the front page slots also. Now, I use my credits to pay for this, not money from my actual bank, as it were. (I earn my credits and then use them to pay for features.)
So, can this be a tax deductible item? How do I treat credits? If I was to buy them, it'd cost me £1 = 1 Credit. However, when earning them, I get 70% of their cash value.
So, for example, I pay 6.5 credits for features every day. Do I treat that as £6.50 or £4.55 (70%)? Or nothing at all? Is it not tax deductible?
It's confusing as obviously something that is tax deductible I would usually have a receipt for, but with this I only have my credit statement on AW...
My second question, is that I have another client whom I met from a sex forum online and he pays money straight into my bank account, for well, nothing really. Strange as it sounds (he likes to be financially dominated), do I have to pay tax on this? I'm confused as I don't really do anything for the money as it were, we have no set agreement. He just puts money into my account erractically.
Any input highly appreciated.
Thanks,
Curly x
The money you pay is in pounds...£1 is one credit, therefore show expense as £6.50
Strictly speaking the money you get for the domination should be declared.
Some accountants may allow you to declare only the money you receive rather than the money earned on the system, like the VAT cash accounting system. so you only declare the money that has been paid to you.
The above method save a lot of confusion and also you have no actual reciepts for the money that you paid for the advertising from your earned credits or the 30% taken from you for the processing fee.
Sarah x x x
PS Can the money paid without actually being earned be treated as a gift?
Money into your bank = Turnover
minus any expenses
= Net profit.
Declare the featuring as an expense if you pay for them out of your pocket, dont declare them if they were paid for from the credit balance.
Thanks very much people, your comments are greatly appreciated
To be honest, that makes it easier for me, i.e. not having to declare the featuring, things are much simpler.
Katy - re the guy who I financially dominate, he's not from AW, totally unrelated, I do work from a few different sites so don't think it's an issue... Only an issue if you start advertising on AW you want bank transfers, lol, which would be totally inappropriate (and against the rules!)
Sarah - that's what I was thinking re the money given from him. Because sometimes he says to me... 'Go out for dinner.' or 'Buy yourself something nice.' He doesn't and I don't say - right, £50 for X, Y or Z...
I think it's best to keep a record of the payments that are gifts, otherwise the tax man will assume that they are all as part of the domination.
To be honest, I had just lumped it in with the rest of the taxable income (if there's one person I don't want to piss off it's the tax man), but was kinda hoping it might be classified as a gift... Maybe I'll just phone them and ask? That's one awkward conversation coming up, lol.
(25-07-2012, 14:32)curlytots Wrote: [ -> ]To be honest, I had just lumped it in with the rest of the taxable income (if there's one person I don't want to piss off it's the tax man), but was kinda hoping it might be classified as a gift... Maybe I'll just phone them and ask? That's one awkward conversation coming up, lol.
Have fun when you call them - you will probably get not much joy to be honest as joe public doesn't get to talk to technical people very much. If I was to answer that question from experience - then apart from not knowing the whole facts - I would say declare it as income.
HMRC would look at the situation etc, frequency, amounts, what other businesses you are involved with.
Pure gifts are tax free, however income disguised as gifts is not tax free.
One thing to consider - for the sums involved is it worth the potential hassle?
Also - are you making use of all the other legitimate tax avoidance planning you can do?
Tax avoidance is the legal way of minimising your tax bill; tax evasion is illegal!
This thread just proves that doing your own accounts can-be dangerous and it's not always as straight forward as you may anticipate!!!
On a personal level I prefer to pass all of it to an accountant (who is XXXtax.com) and spend my time on generating income - If anyone would like a reference about XXXtax then please feel free to PM me.