Tax on extra income

Earning extra money whether online or offline is great for your personal finances but remember that the taxman will want his share of it. If you have any self-employed income you should register with HMRC by the third calendar month after you started or you will face a £100 penalty.

However, remember that the first £6,035 of any income you make is tax free in the 2008-09 finanial year. Also if you incur any costs buying equipment such as a computer or stationery then these costs will be tax deductible as long as you have kept the receipts.

If you are earning less than £4,635 you can complete a CF10 from HMRC which may exempt you from having to pay Class 2 National Insurance contributions on your earnings.