Self-employed, do I tell tax office?

[tru]

I will be self-employed part-time starting next week, I'll be earning around £85 per week. As I won't be earning enough to pay tax, do I have to register with the Inland Revenue?

[Savvy_Sue]

Not sure about the tax office, but I think you have to tell the National Insurance people and apply for an opt-out on your NI payments because you are not earning enough to have to pay 'stamp'. Unless you want to pay it voluntarily: I used to pay a minimum contribution in some years so I could claim maternity allowance, well worth-while!

I am sure someone will tell you definitively about the tax office, but you can always phone your local office for advice, they are usually very helpful. And have you looked on the website? Oh, I just did: http://www.inlandrevenue.gov.uk/selfemployed/ and they say you should tell them.

If it is likely that your income will increase to put you in the tax paying bracket then I would recommend telling them sooner rather than later (and starting a high interest savings account to put your likely tax liability into, of course!)

When I was self-employed they used to send me a yearly self-assessment form and it took me a few years of being back in the PAYE system to get away from this!

All the best with it!

[tru]

Thanks. I have been earning just under the limit for years, I haven't paid tax in ages. It'll probably stay that way for at least another year, if my plan all works out ;D

[vanoonoo]

you've got three months to decide troo

I'd suggest registering as it means you can offset the cost of a number of other things against your household income

in addition it means you can easily take on additional work with little of no comeback

contact your local business link or enterprise agency for information about how to register as self employed

be warned though - as a self employed person you need to have more than one client otherwise you revert to being employed

in addtion if you don't register and are claiming any child tax credits or working tax credits or additional resources through the DWP, you will be commiting benefit fraud

[tru]

Thanks Noo. I used to keep accounts for hubby a few years ago, he was way over his personal allowance so it never occurred to me what the rules were if you're under it ::) I've got spreadsheets ready for keeping accounts, I was gonna use those to show income for tax credits, but I will register as well.

Thanks again ;D

[Savvy_Sue]

I'd suggest registering as it means you can offset the cost of a number of other things against your household income

in addition it means you can easily take on additional work with little of no comeback
Good points, Vanoonoo!

be warned though - as a self employed person you need to have more than one client otherwise you revert to being employed
Is that definitely true? Surely it's more to do with the 'master-servant' relationship? I agree it may be easier to demonstrate that you are self-employed if you have several clients, but you could equally be employed by several different clients.

Certainly in my self-employed days I had only one client. The IR never queried how many I had. My income fluctuated from month to month, and the test as I understood it then was that I had the freedom to accept or turn away their work, just as they had the freedom to offer it to me or anyone else.

Worth checking this one out if you initially do have just the one source of work!

in addtion if you don't register and are claiming any child tax credits or working tax credits or additional resources through the DWP, you will be commiting benefit fraud
Which is definitely worth avoiding!

All the best.

[vanoonoo]

as sure as the latest advice (last tuesday) from the enterprise agency I did my course with and last monday from the VAT man and a week wednesday from the inland revenue.

but who is to say they are right ;)

all were insistent that you must be able to demonstrate that you have more than one client (not necessarily for the same type of work)

for example you might clean for one and do the book keeping for another but you must be able to identify at least two separate clients during your period of self employment. even if one only issues one invoice. if you don't have more than one client you are in effect employed by the one client

the legislation changed about 18 months ago when employers became fully responsible for paid holiday allowance for staff from day one of employment, including contracted and temporary staff (holiday issued via the agency)

hope that clears it up a little

[tru]

Thanks girls ;D

[Savvy_Sue]

Good to have someone utterly up to date, Vanoonoo! I know 'they' are keen to avoid employers avoiding their contractual responsibilities by saying people are self-employed when in fact they are not - which is fair enough. However it still seems slightly draconian to insist that you cannot be self-employed unless your income comes from more than one source! If I hadn't been up so early this morning I would be fishing for 'F'rexamples'. Makes me wonder if what I was doing then would be allowed now!

Actually, here's one. A F'rexample, that is. You want to go back to work, and a friend has agreed to care for your children after school at his house. You all agree he should be paid for this: he needs a little extra money, you can afford it, everyone's happy.

In order to do this legally, your friend has to register as a Childminder. The vast majority of childminders are, I believe, self-employed, caring for children from more than one family. All have to be registered with Ofsted and have a maximum no. of children they can care for. With your children and his children he has one 'vacancy', but he doesn't want to take anyone else's little darlings, and he CANNOT be required to do so.

So is he employed by you, when every other childminder in the nation is self-employed? Or must he issue one other invoice for some other form or work?

The answer's academic, I know. Troo needs to get herself on the straight and narrow. Troo, if you need another one-off source of income and you'd like an hour or so's paid cleaning in the next 10 days, give me a shout and I'm sure we can come to some arrangement! ;D ;D ;D

[tru]

OK, how does next monday suit you? I can bring my own borax ;D

[Savvy_Sue]

OK, how does next monday suit you? I can bring my own borax ;D
Wot, no vinegar? ;D ;D ;D

[vanoonoo]

I dropped some brown sauce on the floor today and it got the tiles gleaming but the kitchen stinks now.

on the note about the childminder situation it's a really good point and I don't know the answer I'm afraid. No one on the course was proposing being a childminder.

[gibby]

yes you have to register


the Inland revenue handle everything now including NI etc

they will send you a pack explaining everything

better to get it sorted than a hefty bill that has to be reduced by a costlt accounctant


G

[tru]

Thanks Gibby. I've only just found out about them handling NI, when did that happen? ;D

I've got all my info ready, I'll ring them tomorrow.

Won't be using an accountant though, I did a book-keeping course a while ago, and my accounts are pretty basic :)

[lellie]

you should inform them because even if you're under the limit it's best for them to know incase they don't believe you in 5 years time when you might be earning over the limit and you could get clobbered..

[tru]

Thanks Lellie ;D

I'm registered now. Thanks to everyone for your help :)

[lellie]

Thanks Lellie ;D

I'm registered now. !Thanks to everyone for your help :)

I know because my mum had been self imployed for years and only registered this year because she asked someone and got warned although she's not been over the tax limit ever it's about time they know she exists just incase they won't believe her in the future..

[theGrinch]

yes you do as you need to complete a self accessment tax return each year.