Don’t risk HMRC fines.
If you publish your book using Amazon self-publishing (UK), it’s automatically reported to the IRS (Internal Revenue Service – America’s version of HMRC). And as a result, they’ll automatically deduct 30% from your profits.
Whilst all non-Americans experience this when signed up to Amazon KDP (Kindle Direct Publishing), it’s important to understand that you don’t have to pay as a UK citizen.
First, you will need to get ahold of one of these two things:
An Employer Identification Number (EIN) is used by the IRS to view employer tax accounts. It’s not too difficult to get hold of one and can be done from home.
On the other hand, an Individual Tax Identification Number (ITIN) is a little more difficult to come by – and it takes a lot of admin.
To remove the 30% tax for your Amazon self-publishing (UK) account, you will need to login to your KDP account. You will need to update the ‘Tax Information’ section.
Following this, when you click on Tax Information, enter your EIN where it says, “Do you have a US TIN?”.
If you get an email back from Amazon explaining that it’s not gone through, don’t panic. The lag time from the IRS updating your records can take a while. Just try again in up to two weeks and it should be successful.
This is pretty simple. Self-employed writers declare their income to HMRC by doing what’s known as a Self Assessment.
To do this, you’ll have to register online by 5th October following any given tax year.
You then pay your tax bill via tax return before the following 31st January. The taxes that you’ll have to pay are:
To calculate what you owe, just use our handy tax calculator!
When you’re self-employed, you have to pay your income tax and national insurance contributions yourself in your annual Self Assessment. Our calculator helps you quickly assess how much you owe.
However you may be eligible for a tax refund when:
In your case when you earn £50,000:
You pay no income tax on first £12,570 that you make
You pay £7,286 at basic income tax rate (20%) on the next £36,430
No contributions on the first £9,568 that you make
You pay £3,549 in contributions (at 9%) on the next £39,432 that you make
You pay £159 in NI Class 2 contributions
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