Sole trader, using Paypal account in foreign currency

[sfg]

Hi,

I'm trying to gather information on how to register as a sole trader and I want to know if I can use a Paypal account in a foreign currency to declare my income.
I'm not an UK citizen, only living here temporarily and I receive my payment (from freelance design work done for clients all over the world) on Paypal in USD. However, I don't want Paypal to convert my USD to GBP because their conversion rate is terrible.
Is it possible to use the account as it is?


Or... perhaps an USA bank account? Basically I withdraw the funds from Paypal to an USA bank account and then I take the money out as GBP from ATMs. The rate is much better like this than it would be to withdraw to an UK bank account as GBP from Paypal.

Thank you.

 

[Gecko001]

The Paypal gift option might be worthwhile looking into.. I have never used it, so cannot be sure if paypal would allow you to use it or if it would save you any money..

 

[sfg]

But that would be to avoid paying taxes, no? I actually want to pay them, but they certainly don't make it easy to figure it out.

 

[Alan]

Yes, you can keep the Paypal balances in USD on Paypal you don't need to exchange them, but unless you are a US resident you won't be able to add a US bank account to UK Paypal.

 

[sfg]

Yes, you can keep the Paypal balances in USD on Paypal you don't need to exchange them, but unless you are a US resident you won't be able to add a US bank account to UK Paypal.

So, just to confirm, I can declare my income for tax purposes using the Paypal account I mentioned?

 

[Gecko001]

But that would be to avoid paying taxes, no? I actually want to pay them, but they certainly don't make it easy to figure it out.

No I was not thinking of that. Insulted that you thought I was to be honest.

 

[Alan]

Yes (i'm not an accountant) you can collect in USD and keep in USD. Just you have to declare income in GBP and pay tax in GBP so you need to calculate the exchange rate for every receipt on the day using a public exchange rate.

I used to get US dividends into a USD UK bank account and did this for years, fortunately though just two calculations per year.

 

[sfg]

No, I do not want to evade tax. That's just what I said. I want to know if I need to convert my earning in GBP in order to declare them or I can declare them in USD using my Paypal account.

 

[sfg]

Yes (i'm not an accountant) you can collect in USD and keep in USD. Just you have to declare income in GBP and pay tax in GBP so you need to calculate the exchange rate for every receipt on the day using a public exchange rate.

I used to get US dividends into a USD UK bank account and did this for years, fortunately though just two calculations per year.

Thank you!

 

[Alan]

Perhaps if you think that posters here are going to advise you on how to evade tax

I think you mis read the OP

I actually want to pay them

 

[sfg]

Ok, another question... after I declare the earnings it doesn't really matter where and how I withdraw and spend them, right?
I mean, if I declare them as you suggested, by keeping them in USD and just declaring them in GBP, I can then withdraw them to my USA bank account and spend them, right?
Guess I should keep receipts for spendings?

 

[Alan]

Once you have paid your tax, you can spend it as you like.

Guess I should keep receipts for spendings?

Business related spending yes!

Total Income
Less Business Expenses
-------------------------
Taxable Income
Less Tax
----------------
Spend as you like

 

[Gecko001]

The income is not taxed at source or declared to HMRC as you get it. You calculate the profit you make as Alan has described and you do this at the end of the financial year. Then put this figure into your income tax self-assessment form under self-employment. If you have only just started to do freelance work, then you have until January 2019 to fill in the form (if you do it online) but it is advisable to do it before this.

 

[Alan]

I guess I should have said, to be clear, you can spend it as you like, but it is advisable to put what you think you owe in tax away for when you have to pay it ...