Self-employed & Full-Time Employed Job

MOPI

Hi I currently have a full-time, Monday to Friday job but have managed to secure a position working for LionBridge as an Internet Assessor.

I have been informed by LionBridge that I need to sort out my own Tax and NI payments. Consequently I have just called HMRC to register as self-employed, firstly is this the correct thing to have done? Secondly what are the tax implications, will I be getting taxed a lot more on my self-employed job? How can I work out how much tax I will be paying on this self-employed job?

I was informed that the NI payments will be £2.50 a week, which isn't too bad.

Also I have read in the past that for the self-employed position I could claim back expenses for electricity etc as I am working from home, is this correct and how do I go about doing it?


Thanks in advance!

KiKi

MOPI wrote: »

I have been informed by LionBridge that I need to sort out my own Tax and NI payments. Consequently I have just called HMRC to register as self-employed, firstly is this the correct thing to have done?

Yes.

Secondly what are the tax implications, will I be getting taxed a lot more on my self-employed job? How can I work out how much tax I will be paying on this self-employed job?

You are taxed by HMRC on your TOTAL income throughout the tax year. You have a personal allowance (probably £7475) on which you are not taxed. That is currently applied to your employed job. You are taxed on 20% of everything over that (unless you hit the 40% bracket).

Therefore, you will be taxed 20% on everything in your SE employed job.

I was informed that the NI payments will be £2.50 a week, which isn't too bad.

That's Class 2 NICs. Class 4 also have to be paid at a rate of 8% on what you earn at the end of the tax year. There are dependencies on things like income and NI that you pay in your employed job, but HMRC will calculate this for you at the end of the tax year. But I would recommend you put 28% of your SE earnings aside to cover this.

Also I have read in the past that for the self-employed position I could claim back expenses for electricity etc as I am working from home, is this correct and how do I go about doing it?

You can't claim expenses back. You offset them against tax, and you do this in your tax return at the end of the tax year.

Also, you can only claim the correct proportion of what you're using for your SE job. Ie, if you use 1 room 2 evenings a week, then you can only claim for elec use for that one room, and for the proportion of hours spent - not your whole elec bill.

HTH
KiKi

MOPI

That's great thanks for your help!

One last thing - because I started officialy as self-employed last week do I need to do a self-assessment just for those couple of days that have passed as the dealdine is approaching?

Thanks again

KiKi

MOPI wrote: »

That's great thanks for your help!

One last thing - because I started officialy as self-employed last week do I need to do a self-assessment just for those couple of days that have passed as the dealdine is approaching?

Thanks again

No. The work you did last week is in the tax year 2011-2012. So you will need to complete a tax return of the end of that tax year, which is April 5th.

You can complete it any time from April 6th onwards; the postal deadline will be sometime towards the end of 2012, and the online deadline will be January 2013.

The deadline coming up next week is the deadline for last tax year (2010-2011), as this one (2011-2012) hasn't finished yet.

HTH
KiKi

londoner01

MOPI wrote: »

because I started officialy as self-employed last week do I need to do a self-assessment just for those couple of days that have passed as the dealdine is approaching?

The deadline of Jan 31st for self-assessment is for the tax year from April 2010 to April 2011, so no, you don't need to do it.

You will need to report this for self-assessment for 2011-2012 which you can start filling in in April if you want. You can always work at your tax return in batches (by saving it and reopening it another time), so you can have an initial look at it and note down any questions etc.

chrisbur

MOPI wrote: »

I was informed that the NI payments will be £2.50 a week, which isn't too bad.

!

If your earnings from this are below a certain level(£5075 for this year) you can get a certificate of low earnings exemption.
http://www.hmrc.gov.uk/forms/cf10.pdf

MOPI

Wow I am really impressed by the helpfulness of the people on this forum, thanks!

Thanks for clarifying that regarding the self-assessment.

With regards to the National Insurance contribution I was undecided what to do with regards to this as depending on the workload allocated to me I could be under or over. I chose to go for the class 2 though and I presume I would be able to apply for a refund if I did not meet the threshold for this?

KiKi

MOPI wrote: »

Wow I am really impressed by the helpfulness of the people on this forum, thanks!

Thanks for clarifying that regarding the self-assessment.

With regards to the National Insurance contribution I was undecided what to do with regards to this as depending on the workload allocated to me I could be under or over. I chose to go for the class 2 though and I presume I would be able to apply for a refund if I did not meet the threshold for this?

It would be sorted out when you do your tax return anyway, but if you *know* you're going to earn less, then you can complete the exemption form.

KiKi

MOPI

Actually I have just thought - if the NI is calculated from April 2011 to April 2012 then I will be exempt from NI as the earnings will no way meet the £5,315 threshold within 2 months from now. Am I correct in thinking this?

KiKi

MOPI wrote: »

Actually I have just thought - if the NI is calculated from April 2011 to April 2012 then I will be exempt from NI as the earnings will no way meet the £5,315 threshold within 2 months from now. Am I correct in thinking this?

Yes, if you won't earn enough between now and April 5th.

KiKi

chrisbur

MOPI wrote: »

I presume I would be able to apply for a refund if I did not meet the threshold for this?

Details of how to apply for a refund and the time limit for doing so are on page 2 of the link I gave.