Hello I was wondering how tax is paid on Iphone Ipad IOS game sales in UK? Do I have to declare it as an individual or is is auto deducted? THanks
it is not deducted, you need to be a company or change your tax to self assessed. If you go self assessed you have to state all earnings per year and your tax is calculated on the whole amount you earn. if the appstore is your only income and you earn less than the min tax allowance (9k) you would pay no tax (except National Insurance). if you earn over 9k you will start to pay tax at 20% just like a normal job. if you have a normal job to then the money your earn from the appstore should be added on and you get taxed on the whole amount. Really you need to at least be self assessed as the money you earn from the appstore is easy for the IRS to see as its all electronic transactions.
UK Thanks for reply but I am not USA for IRS I am UK citizen and yes I have day job but I have not registered company for Iphone publishing and will stat individual publisher
SOrry for using an american sounding (irs) term we are uk too. so you should go self assessed. depending on what tax band your currently in will determine how much tax you pay on your appstore earnings. Going self assesed can be a bit of a pain (and can effect benifts) so i guess it depends how serious you are at making money on the app store (the majority lose money). on the upside you maybe able to declare some of your development costs and house bills as a tax credit.
I'm UK based as well and registered as self employed. Thanks for the info provided in this thread, its been helpful! However, just wondering, what if you are registered as a proper ltd conpany and registered for VAT? Does anyone know what happens then, are you able to claim anything back? My understanding is that sales tax is already deducted before you receive your cut from Apple.... Just curious really, because currently this does not affect me as i'm only registered as a sole trader and have yet to start making any money! Cheers
I too thought an individuals tax was deducted before Apple send payments. However what happens if I make a lot and want to do the Apple thing and go through Ireland for tax to save paying a lot how to do it?
I think thats mostly for large companies to dodge paying taxes ! I wouldnt risk doing anything like that. Plus you must have your own morals, i wouldnt personally try and do that, think its disgusting the way so many big companies dodge paying tax.
Sales tax and an individuals tax are different, the sales tax ie uk vat is already paid/sorted out by apple. Your personal or company tax on profits is not. I think the vat issues does not really come up unless you were buying software and selling it on, which would never really happen on the AppStore. Really you should work towards setting up a limited company as that way it very unlikely that you could be sued personally. Selling as an individual should only be a short term thing really. You can claim a company is based in another country and go by that countries tax rules normally company tax on profits is 20% in the uk. Out of the profits you can pay yourself a dividend but that will be taxed to at about 25% depends on your other earning. Or you could class yourself as an employee and pay yourself though PAYEE. It does get more complicated but I would just set up as a sole trader and change to a company once your confident you can make it on the AppStore then once your doing really well setup a company in china and pay no tax. The more money your make the easier it is to avoid tax.
I appreciate all inputs but how do you pay no tax with a China company and can this also be done or similar in Thailand or Philippines in which Iintend to move to if I ever make good profits? And what if I leave my money in a UK bank and withdraw in Thailand, China or Philippines via ATM?
theres no corporation tax in china, but thats different from personal tax. if you had a company in china you make 100k then the company could keep the 100k but if you pay your self though divined you would still pay around 25% tax. If a uk company makes 100k the it has to pay 20% corporation tax so you are left with 80k then you would sill have to pay 25% tax on the dividend you pay yourself. its usually the corporation 20% tax that the big companies and jimmy carr get out of but the individuals would still pay tax on their earnings. to setup a company in china you would have to be able to prove that there was a legit reason i.e. you have a factory there or suppliers. it not as simple as setting up in the uk. also you can get out of paying some of the corporation tax in the uk with tax breaks. there are tax breaks for research and development and there are even tax breaks for games companies so it may not be worth setting up abroad. once you start making money you can start paying a decent accountant to find all these loop holes and tax scams err.. i mean legitimate business practices. it tends to be the corporation tax you can avoid and not personal tax, it basically means you will have slightly more profits to pay yourself from.