Do you pay tax on uncashed out income?

UK Discussion in 'General Tax Discussion' started by Mocas, Jan 31, 2019.

  1. Mocas


    Jan 31, 2019
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    Hello everyone,

    I am working on a mobile app, which I hope will generate a side income beside my work.
    The app's revenue will be held by the ad company that runs the ads on my app, so I won't have access to the money unless I cash it out.

    So my question is am I correct to assume that the money isn't mine until I cash it out (it becomes in my possession)

    If I wait till the next tax year or even the year after for it to build up, do I still need to declare it? Even though the money isn't really in my bank account and I can't really spend it.
    Mocas, Jan 31, 2019
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  2. Mocas

    bklynboy VIP Member

    Oct 12, 2011
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    Not necessarily and its hard to say without knowing a whole lot more (type of filing, business, LLC, LP, Sole, etc) and the exact terms of the contract. best to quickly consult a Tax attorney or CPA so you can know going in what the consequences are and if possible structure the arrangement to get the best tax position for you. Whether the money is in your account or not is not the necessary trigger - what matters if its considered paid to you or not.

    My own two cents is when revenue is generated someone needs to pay the tax - if not by you then by the ad agency and seems strange to me that ad agency owes the tax when you have the legal claim to that asset.
    bklynboy, Feb 7, 2019
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  3. Mocas

    Fidget VIP Member

    Jan 6, 2013
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    NIce try, Mocas, but HMRC are all over that one! It is basically treated as income (and therefore taxable) at the point in time you become entitled to it. So it doesn't matter whether or not you've 'cashed out'.
    Fidget, Feb 14, 2019 at 7:32 PM
    Becky likes this.
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