Our friends at Una Terra have help draft an overview of tax for Taskers. This is not specific advice because so much of what tax needs to be paid depends on personal circumstance.
How do taxes work for Airtaskers in the UK?
It’s great to see that you’re earning more with Airtasker, well done! While it’s good to have a little extra income, it’s important not to spend it all at once and forget about tax and National Insurance.
Do I need to pay tax on my Airtasker income?
Yes you do!
Each year, you probably earn money from a number of sources, of which Airtasker might be one. Others might include income from employment, income from other businesses you run and investment income from things like bank interest, share dividends or rental income from property. All of this income is generally taxable in the UK.
So, you need to keep a record of all the tasks you do using Airtasker and the amounts you earn from those tasks.
You’ll need to register as ‘self-employed’ to make sure you pay the correct UK Income Tax and National Insurance on your Airtasker income. Guidance on how to do this can be found at: https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed
The Airtasker income needs to be disclosed as ‘income from self-employment’ on your Self-Assessment UK tax returns. You need to record the gross amount (task price) that Posters pay you, not the net amount you receive after the Service Fee is removed.
Can I claim any deductions against my Airtasker income?
The good news is, yes you potentially can, if the expenses are regarded as ‘allowable expenses’ by HM Revenue & Customs.
For self-employed individuals, deductions can typically be claimed for the business use proportion of the following expense types:
- Commissions or fees paid to Airtasker e.g. the Service Fee
- Office costs, e.g. stationery or phone bills
- Travel costs, e.g. fuel, parking, train or bus fares
- Clothing expenses, e.g. uniforms
- Staff costs, e.g. salaries or subcontractor costs
- Things you buy to sell on, e.g. stock or raw materials
- Financial costs, e.g. insurance or bank charges
- Costs of your business premises, e.g. heating, lighting, business rates
- Advertising or marketing, e.g. website costs
Costs can also potentially be claimed for capital allowances. If you use traditional accounting, you can claim capital allowances when you buy something you keep to use in your business, e.g. equipment, machinery, business vehicles.
If you use cash basis accounting and buy a car for your business, you can claim this as a capital allowance. However, all other items you buy and keep for your business should be claimed as allowable expenses in the normal way.
If you use something for both business and personal reasons, you can only claim allowable expenses for the business costs.
If you work from home, you may be able to claim a proportion of your costs for things like heating, electricity, council tax, mortgage interest or rent, internet and telephone use. You’ll need to find a reasonable method of dividing your costs, e.g. by the number of rooms you use for business or the amount of time you spend working from home.
You can avoid using complex calculations to work out your business expenses by using simplified expenses. Simplified expenses are flat rates that can be used for vehicles, working from home, living on your business premises. Further details can be found at https://www.gov.uk/simpler-income-tax-simplified-expenses
In order to claim a deduction, you must be able to prove that you spent the money and that the purchase or expense relates to your business, so remember to keep supporting records such as invoices, receipts, bank statements etc.
Please be aware that if you run your own limited company, you need to follow different rules and advice and you should therefore contact HM Revenue & Customs for guidance. Generally, you can deduct any business costs from your profits before tax. You must report any item you make personal use of as a company benefit.
You should contact the HM Revenue & Customs Self-Assessment helpline (0300 200 3310) if you’re unsure whether a particular cost can be treated as an allowable expense for tax purposes.
So I have income and deductions. What’s next?
If your income exceeds your expenses, the surplus is added to your other taxable income and you pay tax on it.
If your expenses exceed your income and you generate a loss, guidance should be sought on the most appropriate loss relief route available for your circumstances and the tax year in question.
How do I report all this?
In your annual UK Self-Assessment income tax return. This needs to be submitted by 31 January following the end of the UK tax year (which runs from 6th April – 5th April). More detailed information on how to file your UK tax return and settle your tax liability can be found at https://www.gov.uk/log-in-file-self-assessment-tax-return
What if I get it incorrect, wrong or forget?
HM Revenue & Customs has been keeping a closer eye on people earning income from shared economy services like Airtasker, Uber & Airbnb. So, it’s essential that you fully and accurately disclose all your Airtasker income (and expenses!). If you don’t, you could find yourself being audited by HM Revenue & Customs. They will charge interest and penalties on any unpaid or underpaid tax.