Self employment

[Brauny Blue]

Through circumstances at work i will be basically going part time in a few weeks. Whilst this is not a complete disaster, i will be substantially down on my usual salary. Oddly enough I may well be able to bridge the gap by doing extra hours at work, but that is not a given.
Alternatively there are a couple of things i could do (gardening, family research etc) to boost my income.
This is where i need advice.
For starters is there any allowance for people to be able earn a small amount of money before having to declare to the tax man ? or would the fact that i am already earning a moderate amount nulify the allowance ?

If it is that i have to pay full whack to the tax man, i still need to know what are the basic steps of self employment. Never been in this position before and so apologies for my naivety, but good advice even if its of the negative variety is what i need.

 

[Jeff]

Self employed people have the same tax allowance as everyone else. So if you're paying tax now, you'll have to pay tax on your self employed earnings.

You should register with the tax people. There's some good information here: http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm

 

[Siouxsie]

As well as Jeff's link try the following:

http://www.direct.gov.uk/en/Employment/Jobseekers/LookingForWork/DG_173931

 

[Brauny Blue]

Self employed people have the same tax allowance as everyone else. So if you're paying tax now, you'll have to pay tax on your self employed earnings.

You should register with the tax people. There's some good information here: http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm

Thanks for that Jeff.

Do you know whether the tax code would change? seeing that the income would be variable and from different forms of employment. I expect not, but i dont know. Not sure whether its calculated purely on age and possibly your status (married / single)

 

[Lako42]

Im a sole trader, you simply declare your self employed earnings at the end of the financial year, not sure how it works if you are half and half so to speak.

 

[Brauny Blue]

As well as Jeff's link try the following:

http://www.direct.gov.uk/en/Employment/Jobseekers/LookingForWork/DG_173931

Thanks Siouxsie, all help appreciated.

 

[Jeff]

Im a sole trader, you simply declare your self employed earnings at the end of the financial year, not sure how it works if you are half and half so to speak.

The self assessment form has a section for people who are also on PAYE.

 

[Brauny Blue]

Im a sole trader, you simply declare your self employed earnings at the end of the financial year, not sure how it works if you are half and half so to speak.

Do you do your own 'books' or would it be better to have a professional doing them. That might sound daft but i do know someone who payed a modest fee to sort his out once a year.

 

[Jeff]

Do you do your own 'books' or would it be better to have a professional doing them. That might sound daft but i do know someone who payed a modest fee to sort his out once a year.

I've always done my own.

As long as you keep good records of all your income and expenses it's pretty easy to do.

 

[Siouxsie]

Thanks for that Jeff.

Do you know whether the tax code would change? seeing that the income would be variable and from different forms of employment. I expect not, but i dont know. Not sure whether its calculated purely on age and possibly your status (married / single)

The tax code you have reflects the amount you can earn from all sources of income whether employed or self-employed before you start paying tax. eg for this year the standard tax code is 747L which means you have an annual tax free allowance of £7475. (People's codes vary because the tax office adjust them to take benefits like company cars and previous under and overpayments into consideration). Age only comes into it if you are over 65 I think.
If you will still be earning above that amount in your part-time job you are likely to use up your allowance with that under PAYE.

 

[The Major]

Do you do your own 'books' or would it be better to have a professional doing them. That might sound daft but i do know someone who payed a modest fee to sort his out once a year.

I pay an accountant as they are more clued up on what allowances you can claim, mind you they're not always cheap, depends how much you earn, self employed whether it's worth while.

If you're just doing a bit of gardening couldn't you just ask for cash?

 

[MKFox]

Good luck bb

 

[Brauny Blue]

If you're just doing a bit of gardening couldn't you just ask for cash?

Dont you get hung drawn and quartered for that ?

 

[Brauny Blue]

Good luck bb

Cheers Mk, I think i'll need it me ol mucker.

 

[Motown Fox]

Don't forget National Insurance as its easy to get carried away with the Tax issue and either pay National Insurance when you don't need to or not pay it and have to pay arrears later. If you're self-employed you can end up paying Class 2 and Class 4 National Insurance contributions, just Class 2 or none at all.

You may have to pay Class 2 National Insurance contributions at a flat rate of £2.50 a week which they like you to pay as you go along. However, if your earnings are below £5,315 per year (2011-12) or you think they will be you might not need to pay. But you have to complete a form to be officially exempt. Class 4 National Insurance contributions you pay at the same time as your Income Tax when you submit your annual tax return and currently you would pay 9 per cent on annual profits between £7,225 and £42,475 (2011-12) 2% over that amount.

Don't forget you are taxed and pay NI (if any) on your profits so your Business expenses will decrease your profits so it pays to make sure that, as Webbo mentions, you keep good records and receipts of such expenses.

I have Self Employed earnings and PAYE and within PAYE I have 1 main job plus a couple of jobs were I work now and again. I have managed to set aside part of my annual tax free allowance against each job, including the self employed earnings. This you can adjust later if you start getting more income than expected, or less than you anticipated, for any of the jobs.

This ensures that your tax taken over the year will be more or less correct by the time April comes along. In previous years in my additional jobs I used to pay basic rate on my earnings which meant over the tax year I ended up paying too much tax and have to wait for a tax refund after I had submitted the annual tax return.

 

[drew]

Are you going to be woking for the one company still? If so you're not really supposed to be self employed.

My wife has the same issue, although she now has a Ltd company to get round it all. There are some good tax breaks as well, we can claim 40% back on household bills and council tax.

 

[Matt_B]

Are you going to be woking for the one company still? If so you're not really supposed to be self employed.

My wife has the same issue, although she now has a Ltd company to get round it all. There are some good tax breaks as well, we can claim 40% back on household bills and council tax.

How about dining out? :icon_bigg

 

[SJN-Fox]

If you're going to be gardening and such like, don't forget you'll need public liability insurance.

 

[Brauny Blue]

Are you going to be woking for the one company still? If so you're not really supposed to be self employed.

Confused on that one. My company have said that they dont have a problem with me doing other work, so long as i put it in writing what i'm doing. They stated that they would only have issues if i was doing something that was detrimental to my performance at work.
Say doing late night bar work, and then turning up knackered early the following morning was the sort of thing i'd expect them not to accept.
I might be confused with your point though Drew. Are you saying that legally you cant do part-time work and be self employed ?

 

[Macky]

I might be confused with your point though Drew. Are you saying that legally you cant do part-time work and be self employed ?

I'm also a little confused by his comment, I have no idea what he means, but just to clear that point up for you, you absolutely can do part-time (or full-time) PAYE work and also be self-employed at the same time. It would actually be unlawful to try to prevent you from doing so.