Jan 31 is a critical time for self-employed people, which includes many authors, part time or otherwise. It’s the deadline for your annual tax return, and the date for paying the balance of any tax that’s due.
BUT MOST IMPORTANT OF ALL?
It’s a deadline for letting HMRC know you’ve started earning *at all*.
In many cases, the penalties for FILING your return late are higher than those for paying your tax late. It can be up to £1600 a year.
* HMRC will penalise you for being late with your tax return, whether just for the current year or for a couple of years when you’ve forgotten – or ignored? – the need for a return.
* They can also penalise you for a delay in letting them know you’ve started earning, though this isn’t always invoked.
And it all starts with letting them know you’re earning in the first place. Let them know as SOON as you start getting royalty income, let them set up your tax-paying account, and let them send you reminders for what is due and when. Believe me, it’s a relief to know you’re official and legal at HMRC, whatever happens in the future.
* You may only be making a few quid – and when I started publishing, I was actually loss-making for a couple of years – but I still had to let them know I had a self-employed business, or be penalised later down the road.
* If your earnings are modest, you probably won’t have to pay any tax at all. So why should you pay extra for any denial or delay?
LET THEM KNOW. And then relax :).
As always, feel free to email me if you have any questions about this topic or about your personal situation in this event. I can often help mitigate the effect of any delay in dealing with HMRC.