Letters

A taxing question

May 5th 2010

Dear Editor,

Are homeless people who pay their own way (busking) liable for income tax?

Thanks.

Al, by email, full name supplied

Dear Al,

Many thanks for your letter.

We went to HM Revenue and Customs (HMRC) for the definitive answer. Andrew Bennett, of the HMRC press office, was quick to answer the question: "The first point to make is that nobody in the UK pays tax until they are receiving earnings of in excess of £6,475 per year. After that point they will need to pay tax either in the form of Pay As You Earn (PAYE/ employed) or self-assessment (self-employed), and National Insurance if earning over £110 a week."

Clarifying your particular case, he added: "If say someone, as in your scenario, was to offer a musical performance in exchange for cash, then they would be creating a trade and so would need to register as a self-employed business, but only once they earn above the £6,475 threshold."

You will need a postal address to register as well, and we don't think they accept cash, but if you think you're liable to pay based on the threshold, contact HMRC to ask how to begin. The basics on tax can be found here: hmrc.gov.uk/incometax/intro-income-tax.htm

Editor

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