Paid hosting for others - tax question?

[Olied]

Hi I offer web hosting to local small companies that can't afford expensive hosting by putting them on my server and managing it myself. I've only recently started doing this so not sure how the finance side of it works - what will I pay tax on, the income after other hosting and server costs, or before? I've looked at this salary tool but still not totally sure how it works so was hoping somebody here can help me with how it works or what I should do.

 

[MattW]

You pay tax on profit, and if it's not you main income, you would need to declare this as extra income to the HMRC in a self assessment. From my own personal experience having started out similarly several years back, if in doubt, spend a couple of hundred £ and go see an accountant.

 

[Mr Lucky]

In addition to what Matt said, you need to (legally) show profit to be as low as you can. So you can claim expenses against the income, and those would include the cost of the server and miscellaneous hardware (monitors, cables etc.), maintenance, software and updates, broadband connection, insurance, phone lines. There is a lot you can claim for but need organizing as they are accounted differently depending on whether they are physical assets that depreciate (significant hardware), consumables (e.g. cables, office stationary) ongoing running costs (internet connection)

If there are things in there you are also using privately, not for the business, then you can still claim but a percentage that is the business part. An accountant will get you started off and can advise on all of that. I'd advise at this level go to a high street accountant, not a firm in a big office. Should only be a couple of hundred as Matt says.