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l_stackhouse
Community Member

UK Tax Return - Income +/- Upwork Fees

Hello, it's my first time declaring Upwork earnings on my self assessment tax return in the UK and I am totally stuck with how to declare Upwork income/earnings. I'm really hoping and praying someone here can help! 

I am a self-employed/sole trader and have completed a few projects on Upwork. I now need to declare them as income on my self-assessment tax return. 

 

My questions are:

 

- Do I put down the income before or after the Upwork service fee/VAT/withdrawal fee? E.g. the Upwork invoice for the client is $100 before Upwork take their charges. Is that the number I put down? 

- If I have to put income on the tax return down before the Upwork service fee/Vat on service/withdrawal fee - do I put the income down in dollars or pounds? Do I have to convert it to the exchange rate it was when I received the money? 

- And what out of the Upwork Fee / VAT on Fee / and Withdrawl to bank Fee is classed as an expense (I am not VAT registered) 

I am really hoping some UK Upworkers have some knowledge on this because I am struggling. I really want to get it right! Appreciate any help anyone can give 🙂 
Thanks

 

9 REPLIES 9
richardsmith94
Community Member

Hi Laura,

 

You only need to concern yourself with money earnt - ie the amount you received after deductions by Upwork. Just convert that to sterling at the current exchange rate. Go to 'Reports' and then 'Certificate of Earnings'.

 

I am not a tax expert by any means, but it would seem to me that the withdrawal fee is a legitimate business expense.

 

If you're not sure, contact HMRC, I've always found them to be very helpful.

jr-translation
Community Member

I'm in the UK too. I just add up the amounts that go into my bank account in GBP. That saves me having to do any currency conversions.

 

I haven't been audited or asked any expert if this is acceptable, but I see no reason why it shouldn't be.

For my first few years as a freelancer I did it the simple way, just declaring the GBP that actually goes into my bank account as income, and nothing as expenses.

 

But someone from HMRC told me I have to do it the more complicated way: declaring the whole amount charged to the client as income and deducting the various Upwork fees as expenses (even though those never enter or leave my bank account) and having to faff around with currency conversions. So for the last few years I've been trying to do it that way, but it's very frustrating, because it can only ever be an approximation (due to currency-converting money that never actually got converted into GBP or passed through my account), so it feels like my recent tax returns are less accurate.

 

Here is the thread where HMRC told me to do it that way: https://community.hmrc.gov.uk/forums/customerforums/sa/e48537b6-63cd-e911-b3b9-00155d9c6b78#0dd88bb2...

This is good to know. I was really worried that I was gonna get shafted when I got offered a recurring job through upwork, but if I can declare the upwork fee as an expence, that means the uk tax is pretty much refunding you the 10% upwork take out. 

 

That's pretty great. May be confusing, but great.
To do this accurateley, I think I will first do is convert the pay to GBP (without the upwork tax) And then write the whole value as my earned amount, then write the ammount I was taxed, as the expense. I do this with every payout and by the time I have to do my return, I have one number for my total taxable income, and another number for my foreign agency expenses (upwork expenses).

Gosh darn 

Thanks, it seems this link has expired though, I wonder if you have a copy of the link which is still working?

What exchange rate do they recommend we use in this case? As an accurate exchange rate would mean working out the conversion rate of the date of every payout I guess

firebits-studio
Community Member

Hi, How much tax do I need to pay on my earnings from Upwork?


Muhammad A wrote:
Hi, How much tax do I need to pay on my earnings from Upwork?

That depends on how much money you make. First you need to register as self-employed here, and there's more information about setting up as a sole trader here

mark_ve
Community Member

I'm a freelancer and I also declare the whole amount charged to the client and then deduct all various Upwork fees.I have a question though: Upwork charges us VAT on the Service Fee. Is it correct to deduct that amount as well?

 

I can't see why not, it's reasonable to consider the VAT on the Service Fee as a deductible business expense. However I wanted to double check and see how other people are doing this. I am not VAT registered.

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