Unemployed to working as Self Employed?

markbass

Hi guys, i've been out of work for a while and am due to work for someone else oon on a self employed basis and i have a few questions, 1) Should i be putting away my Tax and NI straight away on what i'm paid?

2) Also does the person i'm working for require any info from me regarding me working for him on a self employed basis, like tax codes or anything? is he likely to ask me for any info like that?

Never been self employed before, i have looked at the gov website but just wondered what your experiences of being self employed have been...thanks Mark:)

joanne_d_3

markbass wrote: »

Hi guys, i've been out of work for a while and am due to work for someone else oon on a self employed basis and i have a few questions, 1) Should i be putting away my Tax and NI straight away on what i'm paid?

2) Also does the person i'm working for require any info from me regarding me working for him on a self employed basis, like tax codes or anything? is he likely to ask me for any info like that?

Never been self employed before, i have looked at the gov website but just wondered what your experiences of being self employed have been...thanks Mark:)

hi.

My husband is now self employed after many many years of being an employee.

This site has been an invaluable source of help for us in finding our feet as newly self employed.

I can guarentee you that people with lots more knoweledge than me will come along and answer your questions in detail for you but my take on your questions are :

Income tax and national insurance are payable from the date you START self employment so i would say YES , from the date you start you would be very wise to put away an amount each week which will go towards you tax and N.I bill.

You will pay tax at 20% of your profit
Then you have class 2 AND class 4 of national insurance to pay. (you can google these for more info)

You have registered with HMRC as self employed havnt you ? Self employed people dont have "tax codes" , what you do get is a unique tax payers ref (UTR) which you receive from HMRC when you register as self employed so theres no tax code to give to the other person you will do work for .

As self employed you will be required to keep your own records of all income and all expenditure , this is very important as you will need it when the time comes to self assess.

Gertie_Walker

Just to add to what Joanne says, although tax and NI are due on your s/e profits from day 1, the tax is not actually payable until 31 January 2012 in your case, along with class 4 NIC if due. Class 2 NIC's are payable by DD monthly as soon as you register with HMRC.
You never disclose your tax reference number to anyone, its privtae to you.
You say you will be 'working for someone else' - this sounds to me as if you may not be truely self employed, although without further information, one cannot tell. You need to satisfy yourself that HMRC are happy with the arrangement you have.

Hammyman

markbass wrote: »

Hi guys, i've been out of work for a while and am due to work for someone else oon on a self employed basis and i have a few questions, 1) Should i be putting away my Tax and NI straight away on what i'm paid?

2) Also does the person i'm working for require any info from me regarding me working for him on a self employed basis, like tax codes or anything? is he likely to ask me for any info like that?

Never been self employed before, i have looked at the gov website but just wondered what your experiences of being self employed have been...thanks Mark:)

1) Yes. Put away 30% of every invoice paid into a high interest ISA. You will be sent a Class 2 NIC bill every 3 months for £27 as well.
2) No.

markbass

Yes when i say self employed i mean as a installation guy working for a company on a self employed basis.

And do i really have to put away 30% for tax and insurance each time i'm paid? thats absolutely horrendous, i never dreamed it would be that high!

markbass

Just to add, i will have to invoice the company i'm working for each week with petrol expenses along with the daily rate i'm being paid for the amount of days i've worked that week, the money is good it works out to over £600 a week working 5 days but some weeks i think there could be only 3 or 4 days work for me, still works out to be fairly good money but i never figured on paying 30% of that out on tax and inurance, that seems a heck of a lot more than a person would pay being employed by a normal employer.

Hammyman

markbass wrote: »

Just to add, i will have to invoice the company i'm working for each week with petrol expenses along with the daily rate i'm being paid for the amount of days i've worked that week, the money is good it works out to over £600 a week working 5 days but some weeks i think there could be only 3 or 4 days work for me, still works out to be fairly good money but i never figured on paying 30% of that out on tax and inurance, that seems a heck of a lot more than a person would pay being employed by a normal employer.

It isn't horrendous as a self employed person pays 7% more NIC. Class 2 NIC is ~£3 a week, Class 4 NI 8%, Income Tax 20%. You put that in out of every invoice regardless of whether you have or have not exceeded your threshold in order to cover pay when there are weeks without income. I used to set aside 50% of every invoice in my last business. It meant that when I had a quiet period from January to March, I could continue to pay myself even though I may have only had a few days work per month.

markbass

Ok sort of sinking in now, are there any dodges..ie: things i can claim back on? and also surely the petrol this company reimburse me with at the end of every week isn't liable for the 30%?

and what if the job only lasted 5 months, would i have to pay everything i had save imediately after the job had stopped, because i might want to work for someone else as a normal employee at some point or my self employment might stop for other reasons.

markbass

Oh and how do i make up a proffesional looking invoice? or do you reckon the company will provide me with invoice sheets of some kind, and do i give one to them any make a copy for myself?

Shady_Lady_2

If I was you I would contact the company that will be paying you and ask them how they would like the information, followed by a visit to the hmrc website.

You will need to complete your own self assesment or employ an accountant to do it for you, the best advice I would give you is keep every receipt you get and start drawing up a spreed sheet of everything your paid and everything you spend towards the work your completing. (profit lose accounts)

There are many things that you can claim for from travel costs to coffee's and stamps so get and keep everything.

I will add that I haven't been selfemployed for a couple of years so please double check with HMRC .. they have ppl to help you

Good Luck :cool:

markbass

Thanks for the replies, but lets say i'm paid £600 in a week and on top of that i have to invoice the company for £100 petrol and a overnight stay in a hotel of £60...do i only put away 30% of the £600 and make sure i keep petrol reciepts and hotel reciepts ?????