Declaring Extra Income - But not self employed?

RocketPig

I am employed and am on PAYE.

I have started buying goods in whole sale quanities very cheaply, and have been selling them at RRP. I do this from home over the internet, with customers paying directly into my bank.

I want to declare this extra income, however I'm confused. Am I classed as a business, or self employed?

All's I want to do is fill in a form to HMRC with a cheque, "I've made £1000, here 20%", but something tells me its not that simple?

KiKi

RocketPig wrote: »

I am employed and am on PAYE.

I have started buying goods in whole sale quanities very cheaply, and have been selling them at RRP. I do this from home over the internet, with customers paying directly into my bank.

I want to declare this extra income, however I'm confused. Am I classed as a business, or self employed?

All's I want to do is fill in a form to HMRC with a cheque, "I've made £1000, here 20%", but something tells me its not that simple?

It is that simple. You register as self-employed and work as a sole-trader (ie, not a business). Keep 28% of all SE earnings aside (tax and NI) and complete a tax self-assessment at the end of each financial year.

You can register as SE with HMRC online.

You must keep all invoices, and all receipts, and a record of them for 6 years. Basically, evidence everything that comes in and everything that goes out.

When you complete your tax return, there's a section to declare your PAYE income (from your P46) and and also your SE income (income and expenses). You'll be sent a bill for the tax you owe and can pay that online, too.

HTH
KiKi

RocketPig

THanks for that post! What do you mean though, "keep 28% of all SE earnings"?

CLAPTON

RocketPig wrote: »

THanks for that post! What do you mean though, "keep 28% of all SE earnings"?

it means that you will need to pay 20% tax and 8% NI so it's sensible to save 28% ssomewhere so you will be able to pay the tax when required

cte1111

20% = basic tax rate (40% if you are a high rate tax payer)
8% = national insurance

So you need to keep aside 28% of your earnings which you will in future pay as NI and tax.

RocketPig

I understand now, thanks! Will I be given the equivilant of a P45 or a receipt etc? I only need to do this once a year, and in April I have a clean tax slate?

suso

RocketPig wrote: »

I am employed and am on PAYE.

I have started buying goods in whole sale quanities very cheaply, and have been selling them at RRP. I do this from home over the internet, with customers paying directly into my bank.

I want to declare this extra income, however I'm confused. Am I classed as a business, or self employed?

All's I want to do is fill in a form to HMRC with a cheque, "I've made £1000, here 20%", but something tells me its not that simple?

what amount of profit are you talking about ?

if it is £1000.00 as per your example then you would pay tax of 20 or 40 or 50 % (depending how much you earn through PAYE)

national insurance would only become applicable once your profits from self employment come over £5715.00 (for 2010/2011) @ 8%

for the current year national insurance for self employment becomes applicable once your profits come to over £7225.00 @ 9 %

RocketPig

suso wrote: »

for the current year national employment for self employment becomes applicable once your profits come to over £7225.00 @ 9 %

Sorry what do you mean by that? Do you mean after £7,225 I pay tax? I will already go over this with PAYE.

All things going well I would like to make £30k NET as self employed, with my PAYE this will make me a higher rate tax payer. Do I need an accountant or is it easy to figure out?

grizzly1911

If you are talking of income at those levels I would recommend at least talking to an accountant to ensure you maximixe use of all potential allowances and expenses.

It may be you feel comfortable to do it all yourself but it would be wise that you don't open youself up to uneccessary investigation if you don't get it right.