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I am considering selling my website for 11,500 GBP. The site is not run as a business, though it does make some money, and is essentially a hobby of mine. As a student and non-worker earning less than 4,000 a year (or whatever the boundary is) I don't pay tax of any kind.
Would I be liable to pay tax on the sale of the site?
Probably. But you need to speak to Revenue and Customs. Go to http://www.hmrc.gov.uk/local/index.htm and select "Individuals (including Partnerships & Partners)" and then find your local office and give them a call. They'll be able to advise you exactly what needs to be done.
Yes, you'll have to pay lots of tax on this, because it is income - anyone who earns money above the personal allowance pays tax and national insurance. Assuming you earned £1500 since April via the site , plus the site sale itself, you're looking at an income of £13,000. Which on tax alone is around £1500, plus NI of around £650.
I'm not a tax expert, so I don't know if the sale of a web site comes under a different class of tax, but I would imagine your minimum bill will be around £2000.
Welcome to the wonderful world of the tax man...
Yep - and its not even worth trying to avoid it! It just sucks that we're one of the worst countries in the World for tax. I bet Inland Revenue would whack tax on begging if they could..Originally Posted by shadowbox
Best advice is to go and see a decent tax accountant.
Any income you make from the site while running it is assessed for income tax (hence the name) but essentially the site itself is an asset; so - unless you're in the business of buying and selling sites for profit - you should find that you won't pay income tax, you will have to declare the sale proceeds as a capital gain.
If the sale is treated as a Capital Gain, then you do get a different allowance to use, which is better than your normal income tax allowance, but the calculations can get quite complex.
As I said, best engage the services of a good accountant. Do this before you do the deal though.
Check fees before you agree to meet the accountant. Could cost you more than your tax bill!!!!!!
National Insurance is £104 per year isn't it? Where did you get £650 from?
Sam Hastings
No, national insurance for the self employed is made up of Class 2 and Class 4. Class 4 is 8% of your taxable income.
Although as a previous poster said, this may be classed under capital gains so NI may not come into it.
National Insurance
Class 4 NI is paid on profits not income.
Capital Gains Tax
look at the the revenue website www.hmrc.gov.uk. Lots of info about capital gains tax.
Search facility comes up with all the leaflets some of which are almost in plain English (but not quite)
There is an annual exempt amount which is £ 8,500 for 2005-2006.
Before you walk into one of the mega accountants firms for advice ask around. You may find a student accountant who is capable of making sure you fill in the right bits on the forms
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