Do You Pay Tax On Earnings From Google Adsense In The UK?
If you are wondering whether or not you have to pay tax on your earnings from Google Adsense in the UK, you will find the answer to this question in the following blog post. In addition to this, we will also explore the eligibility criteria for having to pay tax on Google Adsense earnings in the UK, the rate of tax that will apply to your Google Adsense earnings and the process to follow to make sure that any tax due is paid before the due date set by HMRC.
Do You Pay Tax On Earnings From Google Adsense In The UK?
Yes, you do pay tax on earnings from Google Adsense in the UK. Earnings generated through Google Adsense; including advertising revenue are considered income for a self-employed taxpayer in the UK. Therefore, any amount that you earn from Google Adsense in the UK is subject to taxation.
This taxation law in the UK is regardless of whether your earnings from Google Adsense are your primary, secondary, sole or additional source of income.
This means that whether your earnings from Google Adsense are your only source of income, you are self-employed with another source of income, you have a full-time or part-time job with taxes being paid either under the PAYE or Self Assessment system, your earnings from Google Adsense in the UK will be treated as taxable income of a self-employed individual.
Similarly, whether your Google Adsense earnings are your primary source of income (you earn more from Google Adsense than your other source of income) or your secondary source of income (you earn less from Google Adsense than your other source of income), your earnings will remain taxable.
However, the amount of tax you pay will vary depending on your circumstances. This includes your location, your income level, and your tax bracket.
It is important to keep in mind that your tax-free Personal Allowance will apply to your Google Adsense earnings in the same way as it does to other sources of income. This means that if your earnings from Google Adsense are your only source of income, the first £12,570 of your earnings will be tax-free and you will not have to pay any tax on it.
On the other hand, if you earn less than £12,570 through Google Adsense, the entire amount will be covered by your Personal Allowance and you will not have to pay any tax on it.
Meanwhile, if you have multiple sources of income, your Personal Allowance will be applied to the sum of your cumulative incomes and only the amount in excess of £12,570 will be taxed.
How Much Tax Do You Pay On Google Adsense Earnings In The UK?
The amount of tax you pay on your Google Adsense earnings in the UK depends on the following factors:
- how much you earn
- the tax rate that applies to your earnings
- whether Google Adsense is your sole or additional source of income
The first key factor of consideration while determining how much tax you pay on Google Adsense earnings in the UK is the amount you earn. This is directly related to the tax rate that applies to your earnings and can be classified as follows:
- if you earn less than £12,570, you will not pay tax or your tax rate will be 0%
- if you earn between £12,571 and £50,270, you will pay tax at the basic tax rate of 20%
- if you earn between £50,271 and £125,140, you will pay tax at the higher tax rate of 40%
- if you earn more than £125,140, you will pay tax at the additional rate of 45%
When it comes to the nature of earnings that Google Adsense can be classified as, the amount of tax you pay on your earnings will also depend on whether these earnings are your primary or secondary source of income.
If you are registered as self-employed and your Google Adsense earnings are your only source of income, your entire Personal Allowance of £12,570 will apply to your earnings. This means that you will only have to pay tax on income in excess of the Personal Allowance.
However, if your Google AdSense earnings are ad additional source of income with you having other sources of earnings as well, your tax-free Personal Allowance will apply to the sum of all your earnings, before the remaining amount is taxed on the basis of the relevant tax rate.
How Do You Pay Tax On Earnings From Google Adsense In The UK?
Following are the steps you can follow to pay tax on earnings from Google AdSense in the UK:
- In the first step, you should gather all your tax information; such as the details of your Google AdSense earnings (this can be an income statement, a spreadsheet or a handwritten calculation), your tax bracket, and your National Insurance number. In addition to this, you should also have a record of all supportive documents regarding your expenses; such as receipts or invoices.
- In the second step, you should file a Self Assessment tax return on the HMRC website. At this stage, you will need to report your AdSense earnings as self-employment income by filling out the Self-Assessment SA100 form.
- Once you’ve declared your Google Adsense earnings, you will need to deduct your allowable expenses such as the cost of hosting your website or the cost of advertising.
- After you’ve deducted your allowable expenses from your Google Adsense earnings, you will be left with the amount of your taxable income. This is the amount on which your income tax rate will be applied to pay your taxes.
- Once you have filed your tax return, you will need to pay the taxes that you owe; either online, by mail, or by phone.
As a self-employed taxpayer, you should keep in mind that you should file your self-employed tax returns by 31 January each year. This includes the details of all of your Google Adsense earnings and any other self-employed earnings you may have.
The above discussion helps to conclude that earnings from Google Adsense are taxable in the same manner as any other self-employed source of income in the UK. Therefore, if you are making a profit after considering your deductible expenses from Google Adsense earnings, you are liable to pay tax on it.