How much put away for tax - self employed

diving_moose

Hi,
Just wondered what self employed people tend to save from their wage, i have been told about a third but some people say that is alot.
Cheers Lee

PlutoinCapricorn

Well, it depends which bands your profit falls into. If you earn more than the personal allowance, then the income tax will be 20% up to around £43k, and higher rate f40% or anything above that. There is also an 8% Class 4 NI levy if your profit is between £5k and £43k. The exact figures change each tax year.

It is better to save too much than too little.

tyllwyd

To get a rough idea, you could put your expected profit into a salary calculator (like listentotaxman.com). It won't give exactly the right answer, but it will give you an idea of what percentage you should be allowing. As PiC says, it depends a lot on how much profit you make, but once you go over the approx £6k personal allowance, it is scary how quickly the tax bill shoots up.

And if this is your first year self-employed, remember that the first tax bill will be the tax you owe from this year, plus half again in advance for the following year - so it will take a long time coming but it will be a big one when it does arrive, don't get caught out!

vernall

i tend to put away 25% every month,this always covers my tax bill,NI and 3 monthly NI bill

gloucesteroldspot

For me 30% has done the trick, giving a little margin that can safely be salted away after Mr Revenue has had his bite. I have only just discovered however that now I am over 65 I no longer have to pay NI .....joy! One of the few perks of being old.

smartpicture

I've kept track of this over the last 10 years of being self-employed, and it's always been 30-33%. Of course it would be less if you don't earn very much, as the non-taxed part would be a larger proportion of the whole.

My view has always been that it's far better to put too much away than too little - you pay it so far behind that unless you do actually put it away in a separate account, it would be easy to not have it when you need it - especially if work takes a down-turn in the meantime.

crispin

Hi There!
Im Crispin from Thailand!
I am very new to the forum. I have been on here every day since I have found this forum. Like everybody else we have to start somewhere.
I have tried my best to get involved with others. Some times I feel completely excepted into some conversations, other times I feel like a complete stranger that is looking through the window. I for one am excited to find so many people with common interests.

It depends which bands your profit falls into. If you earn more than the personal allowance, then the income tax will be 20% up to around £43k, and higher rate f40% or anything above that. There is also an 8% Class 4 NI levy if your profit is between £5k and £43k. The exact figures change each tax year.


Thank's!....

PlutoinCapricorn

Crispin, on other threads you say that you are from the US and the UK. You just pick up and use material from other people's postings. You have taken something from my posting and included the typing mistake!

Newcomers are always welcome, provided that they have genuine questions and problems and can make real contributions to other people's questions.

If you just want to talk, there is always the Money Savers Arms thread with a discussion board.

fi76

I have always tried to put 25% away each month but to be honest it's never been enough.

Seperate Q? Does anyone know if how much an accountant will cost. I have always done the forms myself but am wondering if an accountant could save me more than he/she would cost.

fuzzball172

I've been keeping a rough count of my profit each month on a white board our office. Every job we do a rough calculation to work out actual income and at the end of each month we bank 28% and that seems to be working out. In addition we pay out quarterly NI contributions monthly via direct debit.
Lee

kimi1101

I have been advised 1/3 of turnover or 25% of net profit. Better to be safe than sorry!!