The Cost of Earning Extra Money

[purplecat]

Last year I helped judge one of the rounds of Google's Science Fair. Yay! For which they paid me. Frankly, not so Yay! Because HMRC. So in January I attempted to sign-up for Tax Self-Assessment. The website said it needed to send me registration code by mail, so I sighed, clicked the button and hoped it would reach me before the online self-assessment deadline. It didn't, though in the interim I was told that since I was paid in July 2015 I wouldn't actually need to fill in the online self-assessment until January 2017 - have no idea if this information was accurate or not.

About two weeks after the self-assessment deadline I get an email from HMRC saying they can't send me a code since they already sent me one in 2008 (when I also foolishly allowed someone to pay me a few hundred extra quid for something). Possibly fortunately I had kept records. About half-an-hour of going around in circles on the self-assessment website later I manage to create a new account (or possibly reactivate my old account or who knows?) only to be redirected to a self-assessment calculator thing which informed me that since I had earned under £2,500 and was otherwise in full-time employment paying tax via PAYE I shouldn't fill in a self-assessment but should instead phone the HMRC Tax Helpline and get them to reclaim the extra money by PAYE.

I did this, this morning. First I had to get through the voice recognition software that wanted me to explain my problem to it in simple terms. It would then tell me what it thought my problem was and I would disagree with it. In the end I told it I wanted to pay more tax, which seemed to get its attention. It read me a little information about what to do if I had been sent notification of an under-payment by HMRC, extracted my name, postcode and national insurance number, before eventually passing me on to someone who had as much difficulty understanding my accent as I did theirs. I explained I had earned extra money last year. They told me to fill in a self-assessment form. I told them that the self-assessment website had told me that the sum wasn't enough for self-assessment and should be included in my PAYE code. They asked me to repeat how much I had earned and then muttered for a bit, presumably inputting stuff into computers. Then they asked me what my annual salary was. Since Liverpool has just moved pay-slips online I then had to log into the Liverpool HR website and multiply my payslip by 12. They then checked the amount I had earned extra - which they had wrong, so I corrected them. Then they informed me that I owed an extra £90 in tax and that a new tax code would be sent to my employer.

I've agreed to judge for Google again this summer. I'm half tempted to waive the fee because paying tax on this sort of money is just as tortuous as I recall from last time around and I'm not sure it's worth the time and effort involved.

Comments

[isis]

Wow, that's insane. At least US taxes are fairly easy on the mechanics of extra income. But yay judging science fairs! I do local judging of our middle-school regional science fair and it's great fun. (And I just get a free breakfast and lunch, which don't need to be declared...)

[purplecat]

I'm sure it's a side effect of the fact that the vast majority of people don't have to file a tax return at all (because of the PAYE system where your employer handles it all) and so most people don't even think about the tax when small sums come their way. It did shake my confidence a little when the Government Tax Helpline told me to fill in a self-assessment and the Government self-assessment website told me not to, that has to be a sign of how rarely anyone flags this kind of thing up.

Sadly the Google judging I do all takes place in a little room just looking at online submissions. The fun stuff happens at a later point as part of a big hoopla in Mountain View. I had a lot of fun doing some judging for the First Lego League a couple of weeks ago though, and that involved actually meeting the participants and talking to them about their robots. FLL only paid expenses so I don't have to worry about the tax implications either!

[a-cubed.livejournal.com]

It could be worse. They still haven't got overseas reports under the online self-assessment. I had a 50p overpayment of tax this year (I'm required to submit a self-assessment since I rent a property in the UK, though I don't earn enough from it to get taxed on the income at present), Since I couldn't do the online form but submitted in January, I had a GBP100 fine. Sigh.

[purplecat]

Urgh! That sounds even worse. So they fined you for submitting early?

[a-cubed.livejournal.com]

Nah, the fine was for submitting in January when a paper submission has to be in by end September (or October, I forget which). This was for 2014-2015 financial year. Yes, I had from May 2015 to do this, so it's mostly my own fault, but it's still really annoying that the actually relatively simple overseas return element isn't in their online system unless I buy (and can run) proprietary software which can submit an electronic return outside the web interface. If there's one group that for both HMRC and the taxpayer would really benefit from online returns, it's ex-pats.

[bookwormsarah.livejournal.com]

Oh what a nightmare. I hate voice recognition with a passion after a miserable session with National Rail Enquiries

"Please state the station you are travelling from"
"Oxford"
"Uxbridge. Is this correct?"
"No. OxFORD."
"Uxbridge. Is this correct?"
"OXford"
"Uxbridge. Is this correct?"
"OXferd"
"Uxbridge. Is this correct?"
"Orchsforrrrd"
"Uxbridge. Is this correct?"
*gentle weeping*

Could you ask that the fee goes to a charity of your choice?

[purplecat]

It didn't help that I didn't really know what answer they were looking for. When I finally hit on "income tax inquiry" it just said "there are lots of possible queries about income tax. Please state in simple terms the nature of your question."

Could you ask that the fee goes to a charity of your choice? This would be tempting had king_pellinor and kargicq not just advised me via Facebook that I should just send them a letter in future. Apparently they're pretty slow processing letters, but then I'm not in any great rush.

[liadt]

Prob shouldn't say this, but can you get them to pay in cash?

[purplecat]

TBH, I'm not sure HMRC would have particularly noticed the bank transfer, its just that it seemed like a signficant-ish enough sum of money that one ought to make the effort since I believe in paying taxes on vague principle. That said, I didn't declare my earnings from writing a short story for Obverse Books since the thought of going through all that over the £3 tax I probably owed on the deal filled me with horror. Since, it would now seem, one can just send them a letter, I may do that next year and perhaps I'll declare my ill-gotten not-quite-fanfiction gains at the same time.

[a-cubed.livejournal.com]

From my experience with Google (they sponsored a speaker at a conference I ran), almost certainly not. They're a large multinational. They pay very little tax by running all sorts of dodges only feasible when you can pay peoples hundreds of thousands of dollars per year to save you millions in tax liabilities. They are therefore very very strict on how they do their financial dealings.

[king-pellinor.livejournal.com]

Not really: they pay little tax in the UK by not doing most of the valuable stuff here, so there's not a lot of profit here.

It's the sort of thing that's perfectly feasible when you're working in many countries, and can choose which country to base which operation in. It's quite simple, really: I could run you through the important aspects of minimising your UK tax liability in that sort of situation in a brief meeting, and could give you proper advice on it for single thousands, rather than hundreds of the things. The media have massively over-hyped this, in my (professional) opinion.

But yes, they are strict about accounting for stuff properly :-)

[a-cubed.livejournal.com]

You could also possibly get them to pay the University instead of you. They'd probably like that - see my other comment about their tax avoidance approach. UoR had a nice scheme whereby such income could be taken in by the university and used by the academic for any valid academic purpose - in latter years they even allowed one to take a modest salary bonus from it.
If Liverpool had some similar scheme, that might be more worthwhile than the hassle over taxes for the money in your personal pocket.

[purplecat]

That's not a bad idea (though see my answer to bookwormsarah above). Liverpool might let it be put in a public understanding fund which I could use to buy more Lego or some such.

Mind you, I'd have to time it so the money came in after the summer zeroing of accounts, not before!

[a-cubed.livejournal.com]

AH, that crap. Yes, I've come across that at other universities. One of the nice things about the Reading scheme was that as long as the academic (or academic-related) staff member was at the university, the fund stayed. There was a get out clause that if there was a LOT of money in there and it wasn't being turned over, the head of school could, with consultation, skim some of it back into school funds. That decision was subjecct to appeal through the usual kinds of channels, though, and heads of school didn't generally do it without agreement. Some people did build up the funds to the point where they could fund or part-fund a PhD student, for example, so built them up for four or five years.
As I was leaving, they seemed to lose the plot, though, and started whittling away at the scheme. In particular they started to cover un-funded EU project taxes from the fund, including not only money contributed from that grant (one of the nice things was that a small proportion of overheads for most external grants would flow into the fund) but all the money in that. Those with large EU projects would then find themselves with nothing left, ever.

[fififolle]

Ugh, yes, it is such a pain. I really gave up doing locums to avoid such drama.
A letter is totally the way to go. I keep a template letter handy :)

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