May 232011

Despite what you may have read somewhere on the Internet, any income earned from Google Adsense is taxable income. It makes no difference whether you earn £5 or £10,000 – this money must be declared to the Inland Revenue as income derived from self employment. Moreover, you must declare yourself as self employed as soon as you start work (this could be when you begin that new website or insert Google Adsense into a personal blog).

If you’re self-employed on a temporary or part-time basis you must register as self-employed with HM Revenue & Customs (HMRC) as soon as you start work. You’ll have to complete a Self Assessment tax return. You are responsible for paying your own tax and National Insurance contributions on the income you earn.

Even if you don’t think you’ll earn enough to need to pay tax, you still need to complete a tax return. (Source: HMRC)

In addition to registering as self employed, you will need to complete an annual Self Assessment tax return. You will be responsible for paying your own tax and National Insurance contributions on the income you earn.

If you’re self-employed you normally have to pay Class 2 National Insurance contributions. In this tax year (2011/12) Class 2 contributions are paid at a flat rate of £2.50 per week. If your annual profits are over a certain amount you also pay Class 4 contributions.

Please note that I am not a tax expert and the information on this page comes without warranty. For accurate information please contact your accountant or HMRC.

  2 Responses to “Google Adsense and UK Taxation for individuals”

  1. Hello,

    Wondering what’s your understanding in this case? If you start with AdSense and they just pay you the minimum treshold of £60, but you then need to pay £2.50/week (ie, £130/year), does it mean that basically you’ve lost £70 for having used adsense in this case? :S

    • Mickael, given your hypothetical situation you’d probably be advised to claim a small earnings exemption. However, you might want to continue with the payments if you weren’t in employment elsewhere and wanted to build up the number of qualifying years for a state pension (assuming such a requirement exists in the future).

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