What happens if you don’t pay tax on second income? Fine, criminal record etc?
I have a full time job paying £26k a year which I obviously pay tax on every month.
Every now and then I teach english lessons and earn at most £50 or £60 a month.
I have never declared this income but wondered what are the penalties if I ever get caught?
Will I just have to pay what is owed, or are there harsher penalties?
I figure at most there is £1000 of earnings in one year not declared.
3 Responses
steffi
31 Jan 2010
legs
31 Jan 2010
Steffi’s reply pretty much covers it – if you don’t own up & are found out HMRC will definitely estimate your Income – unless you have proof of your earnings not declaring self-employed income could cost you dearly.
Simon M
31 Jan 2010
Not that I’m encouraging it, or anything, but if your second income is paid to you in cash, then there is no way it could ever be traced, so there’s no need to worry.
And even if you were paid in the form of cheques…..£50 to £60 a month is hardly likely to strike the HMRC as a major cause for concern. Theres plenty of people out there who earn tens of thousands each year and don’t declare it!
Let us know your thoughts!
You would have to pay the back tax, plus a similar amount as a penalty, interest on the unpaid amount, and there could be monetary penalties for not declaring income on Tax Returns. If this is on a self-employed basis, there are financial penalties for not registering your self-employment within three months of starting.
They don’t call it fines, but financial penalties. It is the same thing in all but name. The main problem could be that they are likely to estimate what you earned, and charge tax on the estimate. It would be very difficult for you to prove those figures wrong, so the tax charged could be in excess of what you actually owe.