Google adsense tax question

[Jason901]

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If anyone could help me please?

Do you include on the return the total amount of payments received in the tax year (Accounting date) or if they were paid after the accounting date but money earned was before the accounting date end do you include those? HMRC say it's money due rather than payment received in their guide, but with this kind of earnings you don't invoice people.

[Lucia_Begoer]

If anyone could help me please?

Do you include on the return the total amount of payments received in the tax year (Accounting date) or if they were paid after the accounting date but money earned was before the accounting date end do you include those? HMRC say it's money due rather than payment received in their guide, but with this kind of earnings you don't invoice people.

It is money due rather than paid but I've always done what suits me. The exception would be when you are liable for vat and larger sums are involved.
For instance if a network owed you £1,000 and never paid you then you would be better off having an unpaid invoice that you could set off against other income rather than just never mentioning it. If they never generated an invoice then you'd be better creating one - even if you backdated it?

For adsense you can use the earnings statement as a kind of invoice and as they pay every month it isn't such a big issue.

[hrbs]

If anyone could help me please?

Do you include on the return the total amount of payments received in the tax year (Accounting date) or if they were paid after the accounting date but money earned was before the accounting date end do you include those? HMRC say it's money due rather than payment received in their guide, but with this kind of earnings you don't invoice people.

Hi Jason

You include in your tax return income earned whether or not it was received at your year end. Adsense income is paid 1 month in arrears (subject to meeting the threshold and the banking days), so the income received at the end of April/early May 2012 was earned in March 2012 and included in your income for 2011/12.

Similarly you include costs incurred but not paid until after your year end. So if you pay any suppliers in arrears you can include the costs that relate to 2011/12 in your tax return even if they were paid later.

Bear in mind income and costs can only be included in your tax return once, so you will need to make an adjustment in your 2012/13 tax return.

The following example may help, where income is received upto 2 months in arrears, and a year end of 31 March is used.

In the March 2012 accounts the income figure would be:

Total income received in the year ended 31 March 2012
less: income received in April/May 2011 earned prior to 31 March 2011 [if included in the 2011 accounts]
plus: income received in April/May 2012 earned prior to 31 March 2012

and in your March 2013 accounts the income figure would be:

In the March 2012 accounts the income figure would be:

Total income received in the year ended 31 March 2013
less: income received in April/May 2012 earned prior to 31 March 2012
plus: income received in April/May 2013 earned prior to 31 March 2013

As you can see the income is not taxed twice.

HMRC's helpsheet 222 in respect of preparing sole trader accounts is at http://www.hmrc.gov.uk/helpsheets/hs222.pdf .

I have various free guides on my website (tips.hrbs.biz) which you might find useful

Regards

Keith (HRBS.biz)