Tax on second income

ambarking

Hi Guys

I have a quick question I was hoping one of you could help me with (sorry if this is in the wrong place on the forums, I'm new ).

I work full time, but have decided to start a computer repair company in my spare time. But I can't seem to find anything anywhere about how much tax I would be expacted on pay on my second income. Some people have said it would be as much as 40% but I would be able to claim back certain things to help offset this cost when I do my tax return.

I'm only going to be earning about £6,000 per year extra and it seems a bit unfair that I will have to pay £2400 out in tax and by the time I take other costs into account I will probably only make £2500 extra for losing my weekends and evenings

Hopefully someone will be able to shed some light on this for me.

Thanks in advance
John

amibovvered

I'm not a tax expert but having in the past had two jobs at the same time my experience is that tax is payable on your total income in exactly the same way as if it were one income stream. In my case my full-time job used up my personal allowance so for the second job I had a tax code of zero and paid at 20% (or whatever it was then) HTH

heretolearn_2

don't listen to 'some people' . 'some people' are usually talking out of their bums, especially when it comes to second jobs/second incomes. For some bizarre reason 'some people' like to make up all sorts of odd things about the tax situation to stop you bothering. I think weird jealousy or something - they don't WANT you to improve your situation for some reason known only to them. See it all the time here, people wanting to start a small business and others trying to stop them by making vague untrue warning noises about being taxed to the hilt.

How much do you earn in your full time job? Are you on basic 20% tax rate there?

All income is lumped together for taxation - you get the exact same tax allowances as anyone else never mind if it is one job or ten jobs or businesses.

Basic tax rate is 20%. If the profit (not turnover) or your business does not take you over the next tax allowance limit, then you'll pay tax at 20% on the profit. So if you earned £6,000 and your expenses were, say, £2000 leaving £4000 profit, then you'd pay £800 tax.(20% of 4000).

LindaJane47

couldn't agree more with 'Heretolearn'

You'll only pay 40% if your TOTAL earnings go over the 40% band, and your second income will be your profit, not your turnover (ie your second income will be everything you get paid minus what it costs you to run the business).

I also thing that 'some people' earn such a lot of money that they assume we all do, so that if we earn a little more we will be in the 40% tax bracket if only, eh??!

ambarking

Thanks for the help guys. If thats the case then I think I will go for it. Watch out Bill Gates here I come

nlj1520

Don't forget to register as self-employed with HMRC if your second job will not be through a company....you can do this online. I think you have 3 months from the date you start trading.
In working out the amount you will have to pay you will need to include National Insurance on your second income stream. This is payable as a small amount each month/quarter and then the full amount is calcualted and payable with the tax. Can't remember the rate but have a feeling it's 8% on self-employed profits.

John_Pierpoint

National Insurance is just another tax especially for the self employed, raised on a weekly cycle (class 2) and annual (class 4) basis, when you complete the annual self assessment which you will be sent.
It is now 9%
http://www.hmrc.gov.uk/working/intro/class4.htm